Apartment Construction Still Increasing in Some Markets
Digested from “Apartment Construction Boom Could Extend Well Into 2016”
CoStar Group (2/18/15) Drummer, Randyl
Given solid national job growth and strong demand for rental units, economists from the commercial real estate firm CoStar predict that the delivery of new units in 2015 will keep pace with demand.
While apartment demand remains strong among all demographics, the 20- to 34-year-old will reach its peak over the next few years. This will potentially add 2 million young professionals into the rental market.
But with multifamily starts at their highest levels since the 1980s — Denver and Houston will each deliver more than 20,000 units over the next two years — CoStar predicts that the national vacancy rate will rise slightly to 5.5 percent by the end of this year. In addition, the company predicts that rent growth will slow to below 2 percent next year.
Vacancies in 4- and 5-Star properties in Boston, Houston and Washington, DC, have ticked up, as that supply has recently increased. However, supply of 3-Star properties across the country has not grown as much, and vacancy rates in the middle market have stayed put so far.