Apartments delivered in 2018 were well ahead of the nation’s historical average of the past three decades, RealPage reports.
Elevated delivery volumes in 2018 extended the record-breaking apartment supply cycle, and 2019 is expected to bring more of the same. Though U.S. completions overall are expected to remain elevated for at least another year, there are significant shifts in activity from one metro to another, RealPage reports.
Developers completed 287,000 units last year, making 2018 the fifth year of U.S. delivery volumes above the 250,000-unit mark. Supply volumes faltered a bit from 2017 levels, as the completion dates of 30,000 or so units were pushed back because of construction delays largely tied to labor shortages.
However, the number of apartments that were delivered was still well ahead of the nation’s historical average of the past three decades. Looking ahead, another 319,000 or so units are on tap for 2019, a volume that once again hits at peak levels.
As the nation continues to churn out new apartments, individual markets are seeing completion numbers fluctuate. As developers seek new opportunities, some markets are witnessing scheduled supply volumes surge in 2019, and others are seeing dramatic decreases. Among the top 10 largest increases expected in major markets, five are in California.
All three Bay Area metro areas rank among the top 10 major markets for supply increases in the coming year. A chronically undersupplied region, the Bay Area has very few existing vacancies and apartment demand during the current economic cycle has been focused on the submarkets that have received the largest amount of new apartment units. With each metro in the Bay Area being a high barrier-to-entry market, new supply has been concentrated in only a handful of submarkets.
In the coming year, Oakland is expected to see the nation’s most extreme supply increase. This market is scheduled to record the completion of about 6,800 units in 2019, a volume that is nearly seven times the number of apartments delivered in 2018.
West Palm Beach should record the steepest downturn among major markets, with about 572 units scheduled to complete in 2019, a 71.6 percent decrease from its 2018 volume. The projects underway in this market are well below the average of about 2,300 units seen in the past five years. Cleveland (68.7 percent), Pittsburgh (60.6) and Cincinnati (51.6) also are expected to decline by more than 50 percent this year.