US Apartment Development Expected to Peak Just as More Renters Look to Own
Analysts Anticipate Rent Growth, Occupancy Easing in Some Markets
For the U.S. apartment market, 2019 may be the year the wave breaks.
Developers are building 660,000 new apartments nationwide, according to CoStar data – about 4 percent of the existing stock. They’re expected to finish 500,000 of those over the next 18 months, marking the peak of a busy development cycle. After that, deliveries will finally slow down, according to CoStar research.
This wave of new projects comes after the national market has already had an almost 20 percent increase in apartments since 2012. And mostly, renters have gobbled them up.
But the market could be reaching saturation – at least in some places.
“A lot of these markets have been so bullet-proof - that’s lulled people to sleep a little bit,” said Blake Okland, the head of Newmark’s multifamily sales. “There are some perfect-storm scenarios.”
According to CoStar, Miami, Boston, Nashville, Jacksonville and Seattle will all have completions of twice that national average of 4 percent. Miami leads the way with 17,061 apartments under construction – an addition of 11.5 percent of its existing stock. New York City has more than 58,000 new units in the works, the most of any metropolitan area, but that’s just 4.3 percent of its existing supply.
CoStar’s forecast of the most likely scenario shows supply outstripping demand nationwide by mid-2019, and that phenomenon continuing for the next five years.