Multifamily proposal activity maintains sizzling pace in Q2

Proposal activity for Multifamily-for-Rent (Apartments) and Condominium properties continued to exceed historic norms, with Condos achieving its highest level since PSMJ Resources began tracking submarkets in its Quarterly Market Forecast (QMF) of A/E/C firm leaders. Apartments, which recorded its third-highest NPMI of 71% in the 1st Quarter, repeated that score in the 2nd Quarter.

While 61% of respondents working in the Condo market reported an increase in proposal activity from the 1st Quarter to the 2nd Quarter, only 2% saw a decline. This net plus/minus index (NPMI) of 59% exceeded the previous high for Condos of 49% achieved in the 4th Quarter of 2014.

Second-quarter proposal activity for Apartments continued to outpace all other submarkets in the Housing sector and all but one (Product Manufacturing) of the 58 submarkets measured across all construction sectors. A full three-quarters of the A/E/C firm leaders responding to PSMJ’s quarterly survey said that Multifamily proposal opportunities grew in the 2nd Quarter compared with only 4% who reported a decline.

The NPMI expresses the difference between the percentage of PSMJ member 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 12 major markets served by the A/E/C industry since its inception in 2003, and for 58 submarkets since 2006.

The record-high NPMI for Apartments was 76% in the 1st Quarter of 2018, followed by 72% in the 1st Quarter of 2012 and 71% in the 1st Quarters of 2015 and 2021.

PSMJ Senior Principal David Burstein, PE, AECPM, says the future strength of the housing market relies heavily on the ability of state and federal government agencies to invest adequately in infrastructure. “The condo and apartment markets have been on fire for several years, resulting in a lot of new multifamily housing,” says Burstein. “This is now creating traffic and other congestion problems which, if not dealt with by the cognizant government agencies, may cause the multifamily market to slow down in the coming quarters. So it is important to continue tracking the PSMJ NPMI over the next few quarters to spot any emerging slowdowns.”

The Assisted/Independent Senior Living submarket leveled off to an NPMI of 49%, down 10 NPMI percentage points from the 1st Quarter. While 51% of respondents reported an increase in proposal activity, only 2% saw a drop and the remaining 47% said opportunities were flat.

The two other Housing submarkets measured in the PSMJ survey remained strong. The Housing Subdivision market recorded an NPMI of 68% for a second straight month, as not a single respondent in the 2nd Quarter survey reported a decline in proposal opportunities. Single-Family Homes also repeated its 1st Quarter NPMI; the 51% index score once again tied for its second-highest level since the inception of submarket data tracking in the QMF.

PSMJ Resources, a consulting and publishing company dedicated to the A/E/C industry, has conducted its Quarterly Market Forecast for more than 18 years. It includes data on 12 major markets and 58 submarkets served by A/E/C firms. For more information, go to https://www.psmj.com/surveys/quarterly-market-forecast-2.

Multifamily rents continued to increase through the first half of 2023, despite challenges for the sector and continuing economic uncertainty. But job growth has remained robust and new households keep forming, creating apartment demand and ongoing rent growth. The average U.S. apartment rent reached an all-time high of $1,716 in May.

Industry Research | Jun 15, 2023

Exurbs and emerging suburbs having fastest population growth, says Cushman & Wakefield

Recently released county and metro-level population growth data by the U.S. Census Bureau shows that the fastest growing areas are found in exurbs and emerging suburbs.

Contractors | Jun 13, 2023

The average U.S. contractor has 8.9 months worth of construction work in the pipeline, as of May 2023

Associated Builders and Contractors reported that its Construction Backlog Indicator remained unchanged at 8.9 months in May, according to an ABC member survey conducted May 20 to June 7. The reading is 0.1 months lower than in May 2022. Backlog in the infrastructure category ticked up again and has now returned to May 2022 levels. On a regional basis, backlog increased in every region but the Northeast.

Supply-chain snags are among the factors delaying construction.

Industry Research | Jun 13, 2023

Two new surveys track how the construction industry, in the U.S. and globally, is navigating market disruption and volatility

The surveys, conducted by XYZ Reality and KPMG International, found greater willingness to embrace technology, workplace diversity, and ESG precepts.

Skanska USA's mental health trainees are identified by a Green Sticker

| Jun 5, 2023

Communication is the key to AEC firms’ mental health programs and training

The core of recent awareness efforts—and their greatest challenge—is getting workers to come forward and share stories.

Contractors | May 24, 2023

The average U.S. contractor has 8.9 months worth of construction work in the pipeline, as of April 2023

Contractor backlogs climbed slightly in April, from a seven-month low the previous month, according to Associated Builders and Contractors.

Multifamily Housing | May 23, 2023

One out of three office buildings in largest U.S. cities are suitable for residential conversion

Roughly one in three office buildings in the largest U.S. cities are well suited to be converted to multifamily residential properties, according to a study by global real estate firm Avison Young. Some 6,206 buildings across 10 U.S. cities present viable opportunities for conversion to residential use.