The brief downturn in the Multifamily-for-Rent market outlook is clearly over as PSMJ’s forward-looking proposal activity metric reached its highest level for the sector in nearly two years. Proposal activity in the 4th Quarter, as measured by PSMJ’s Net Plus/Minus Index, climbed to 58% in the 4th Quarter, up from 40% in the 3rd Quarter. This is the sector’s highest NPMI since it hit 76% in the 1st Quarter of 2018, according to PSMJ Resources’ Quarterly Market Forecast (QMF). Multifamily had plummeted to -2% and +7%, respectively, in the first two quarters of 2020, coming off a 4th Quarter 2019 NPMI of 54%. Its 1st Quarter 2020 performance was its lowest in almost a decade.
PSMJ Senior Principal David Burstein, PE, AECPM, noted that the turnaround in the Multifamily-for-Rent and Condominium markets are part of an overall upward trend for all Housing markets. “The significant turnaround in both of these multifamily markets are attributable to an increase in personal savings resulting from the government’s stimulus checks as well as significant movement of many people from cities to suburbs – which is shifting the location of the demand,” he said. “So we believe the Multifamily market will continue to be strong into the foreseeable future.”
PSMJ’s NPMI expresses the difference between the percentage of firms reporting an increase in proposal activity and those reporting a decrease. The QMF has proven to be a solid predictor of market health for the architecture and engineering (A/E) industry since its inception in 2003. A consistent group of over 300 A/E firm leaders participate regularly, with 132 contributing to the most recent survey.
The Condominium and Assisted/Independent Living markets also continued their rebound. Condos’ NPMI crept up to 15% from 11% in the 3rd Quarter, off dismal results in the 1st (-28%) and 2nd (-26%) quarters. The 4th Quarter performance for Condos was still off from the 22% it recorded in the 4th Quarter of 2019. Similarly, Assisted/Independent Living showed minor improvement in the 4th Quarter (up from 26% to 27%, quarter over quarter) and down from the 52% the survey reported for the sector a year ago. It was also negative in the 1st (-3%) and 2nd (-1%) quarters of 2020.
The two other Housing markets measured in the PSMJ survey also show long-term promise for design and construction activity, according to the QMF. Single-Family Homes (59%) and Single-Family Subdivisions (51%) both reached their highest NPMI since PSMJ began collecting survey data for submarkets in 2006.
Among the 12 major markets surveyed, Energy/Utilities unseated Housing with an NPMI of 47%, though Housing’s runner-up NPMI of 43% was an improvement from 38% in the 3rd Quarter. Water/Wastewater, another stand-out during COVID, slipped to 6th among the 12 markets measured. Its NPMI of 23% is down from 37% the prior quarter. Healthcare’s outlook remained steady at 35% (up from 30%), as did Light Industry (35%, up from 27%). Heavy Industry had the greatest gain, rocketing to 32% from 0% due to strong scores in Product Manufacturing (40%) and Pharmaceutical Production (35%).
Proposal activity for Education projects trailed again at -29%, though it improved from -37%. Commercial Users (-29%, up from -31%) and Commercial Developers (-13% up from -23%) rounded out the dozen.
PSMJ Resources, a consulting and publishing company dedicated to the A/E industry, has conducted its Quarterly Market Forecast for more than 17 years. It includes data on 12 major markets and 58 submarkets served by A/E firms. For more information, go to https://www.psmj.com/surveys/quarterly-market-forecast-2.
Related Stories
Market Data | Apr 11, 2023
Construction crane count reaches all-time high in Q1 2023
Toronto, Seattle, Los Angeles, and Denver top the list of U.S/Canadian cities with the greatest number of fixed cranes on construction sites, according to Rider Levett Bucknall's RLB Crane Index for North America for Q1 2023.
Contractors | Apr 11, 2023
The average U.S. contractor has 8.7 months worth of construction work in the pipeline, as of March 2023
Associated Builders and Contractors reported that its Construction Backlog Indicator declined to 8.7 months in March, according to an ABC member survey conducted March 20 to April 3. The reading is 0.4 months higher than in March 2022.
Market Data | Apr 6, 2023
JLL’s 2023 Construction Outlook foresees growth tempered by cost increases
The easing of supply chain snags for some product categories, and the dispensing with global COVID measures, have returned the North American construction sector to a sense of normal. However, that return is proving to be complicated, with the construction industry remaining exceptionally busy at a time when labor and materials cost inflation continues to put pricing pressure on projects, leading to caution in anticipation of a possible downturn. That’s the prognosis of JLL’s just-released 2023 U.S. and Canada Construction Outlook.
Market Data | Apr 4, 2023
Nonresidential construction spending up 0.4% in February 2023
National nonresidential construction spending increased 0.4% in February, according to an Associated Builders and Contractors analysis of data published by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $982.2 billion for the month, up 16.8% from the previous year.
Multifamily Housing | Mar 24, 2023
Average size of new apartments dropped sharply in 2022
The average size of new apartments in 2022 dropped sharply in 2022, as tracked by RentCafe. Across the U.S., the average new apartment size was 887 sf, down 30 sf from 2021, which was the largest year-over-year decrease.
Multifamily Housing | Mar 14, 2023
Multifamily housing rent rates remain flat in February 2023
Multifamily housing asking rents remained the same for a second straight month in February 2023, at a national average rate of $1,702, according to the new National Multifamily Report from Yardi Matrix. As the economy continues to adjust in the post-pandemic period, year-over-year growth continued its ongoing decline.
Contractors | Mar 14, 2023
The average U.S. contractor has 9.2 months worth of construction work in the pipeline, as of February 2023
Associated Builders and Contractors reported today that its Construction Backlog Indicator increased to 9.2 months in February, according to an ABC member survey conducted Feb. 20 to March 6. The reading is 1.2 months higher than in February 2022.
Industry Research | Mar 9, 2023
Construction labor gap worsens amid more funding for new infrastructure, commercial projects
The U.S. construction industry needs to attract an estimated 546,000 additional workers on top of the normal pace of hiring in 2023 to meet demand for labor, according to a model developed by Associated Builders and Contractors. The construction industry averaged more than 390,000 job openings per month in 2022.
Market Data | Mar 7, 2023
AEC employees are staying with firms that invest in their brand
Hinge Marketing’s latest survey explores workers’ reasons for leaving, and offers strategies to keep them in the fold.
Multifamily Housing | Feb 21, 2023
Multifamily housing investors favoring properties in the Sun Belt
Multifamily housing investors are gravitating toward Sun Belt markets with strong job and population growth, according to new research from Yardi Matrix. Despite a sharp second-half slowdown, last year’s nationwide $187 billion transaction volume was the second-highest annual total ever.
