By the end of 2015, 49 of 54 U.S. markets tracked by CoStar Group, the commercial real estate research firm, are expected to see their apartment vacancy rates increase.
That would suggest that supply in the multifamily sector is catching up with—or in several markets surpassing—demand. Last year, the 340,000 multifamily units started represented the highest level of construction since the 1980s. And some 20,000 new apartments are expected to come online in both Dallas and Denver alone this year.
Yet, despite the threat of oversupply there appears to be a consensus emerging, that positive demographic and economic forces could keep multifamily demand robust—and construction humming—at least through 2016.
The ever-optimistic National Association of Home Builders, for example, forecasts 358,000 multifamily starts in 2015, a level that Robert Denk, NAHB’s senior economist, thinks is “healthy and sustainable.” He told Multifamily Housing News recently that he expects that construction level to be maintained “for the next couple of years.” Denk also expects the country’s economic growth rates to be “high” in 2016.
In its Fourth-Quarter and Year-End 2014 Report, CoStar acknowledges that developers may need to “dial back” new construction after 2015 to keep vacancies (which ended last year at their lowest point in 10 years) and rents at healthy levels. CoStar estimates that new supply could push vacancy rates to 5.5% by the end of 2015.
On the other hand, today’s renter cohort, comprised largely of Millennials, “will take longer to transition into home buying than any demographic group in the last 30 years—obviously a good trend for apartment owners,” says CoStar. The research firm also foresees a 2-million-person increase in Millennial employment over the next few years, resulting in 1.53 million new households. “Apartment investors will find plenty of demand for new product.”
While some renters eventually will start families and relocate to homes in the suburbs, “a larger share of older households will be in the rental market,” mostly for lifestyle reasons. CoStar expects landlords to make a concerted effort to address the needs of renters as they age.
Multifamily as an asset class now exceeds $3 trillion, according to Andrew Florance, Founder and CEO of CoStar Group, which has detailed information on over 450,000 apartment properties in its database, the industry’s largest. More than 100 million Americans now rent, and 30 million people move annually. On Feb. 17, CoStar re-launched Apartments.com, its website for online searches of apartments, condos, and rental homes. Florance projects that, based on anticipated demand, within the next 10 years CoStar Group could achieve $550 million in annual revenue and $250 million in annual cash flow from this site.
CoStar will invest $75 million into marketing Apartments.com in 2015, a multimedia campaign that is scheduled to kick off on March 1.
Related Stories
| Aug 11, 2010
Triangular tower targets travelers
Chicago-based Goettsch Partners is designing a new mixed-use high-rise for the Chinese city of Dalian, located on the Yellow Sea coast. Developed by Hong Kong-based China Resources Land Limited, the tower will have almost 1.1 million sf, which includes a 377-room Grand Hyatt hotel, 84 apartments, three restaurants, banquet space, and a spa and fitness center.
| Aug 11, 2010
Brooklyn's tallest building reaches 514 feet
With the Brooklyner now topped off, the 514-foot-high apartment tower is Brooklyn's tallest building. Designed by New York-based Gerner Kronick + Valcarcel Architects and developed by The Clarett Group, the soaring 51-story tower is constructed of cast-in-place concrete and clad with window walls and decorative metal panels.
| Aug 11, 2010
RMJM unveils design details for $1B green development in Turkey
RMJM has unveiled the design for the $1 billion Varyap Meridian development it is master planning in Istanbul, Turkey's Atasehir district, a new residential and business district. Set on a highly visible site that features panoramic views stretching from the Bosporus Strait in the west to the Sea of Marmara to the south, the 372,000-square-meter development includes a 60-story tower, 1,500 resi...
| Aug 11, 2010
'Feebate' program to reward green buildings in Portland, Ore.
Officials in Portland, Ore., have proposed a green building incentive program that would be the first of its kind in the U.S. Under the program, new commercial buildings, 20,000 sf or larger, that meet Oregon's state building code would be assessed a fee by the city of up to $3.46/sf. The fee would be waived for buildings that achieve LEED Silver certification from the U.
| Aug 11, 2010
Colonnade fixes setback problem in Brooklyn condo project
The New York firm Scarano Architects was brought in by the developers of Olive Park condominiums in the Williamsburg section of Brooklyn to bring the facility up to code after frame out was completed. The architects designed colonnades along the building's perimeter to create the 15-foot setback required by the New York City Planning Commission.
| Aug 11, 2010
U.S. firm designing massive Taiwan project
MulvannyG2 Architecture is designing one of Taipei, Taiwan's largest urban redevelopment projects. The Bellevue, Wash., firm is working with developer The Global Team Group to create Aquapearl, a mixed-use complex that's part of the Taipei government's "Good Looking Taipei 2010" initiative to spur redevelopment of the city's Songjian District.
| Aug 11, 2010
Recycled Pavers Elevate Rooftop Patio
The new three-story building at 3015 16th Street in Minot, N.D., houses the headquarters of building owner Investors Real Estate Trust (IRET), as well as ground-floor retail space and 71 rental apartments. The 215,000-sf mixed-use building occupies most of the small site, while parking takes up the remainder.
| Aug 11, 2010
Housing America's Heroes 7 Trends in the Design of Homes for the Military
Take a stroll through a new residential housing development at many U.S. military posts, and you'd be hard-pressed to tell it apart from a newer middle-class neighborhood in Anywhere, USA. And that's just the way the service branches want it. The Army, Navy, Air Force, and Marines have all embarked on major housing upgrade programs in the past decade, creating a military housing construction boom.
| Aug 11, 2010
Loft Condo Conversion That's Outside the Box
Few people would have taken a look at a century-old cigar box factory with crumbling masonry and rotted wood beams and envisioned stylish loft condos, but Miles Development Partners did just that. And they made that vision a reality at Box Factory Lofts in historic Ybor City, Fla. Once the largest cigar box plant in the world, the Tampa Box Company produced boxes of many shapes and sizes, spec...
| Aug 11, 2010
World's tallest all-wood residential structure opens in London
At nine stories, the Stadthaus apartment complex in East London is the world’s tallest residential structure constructed entirely in timber and one of the tallest all-wood buildings on the planet. The tower’s structural system consists of cross-laminated timber (CLT) panels pieced together to form load-bearing walls and floors. Even the elevator and stair shafts are constructed of prefabricated CLT.
