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New apartment deliveries will likely slow next year with development activity hitting a peak this year. Most of the new construction activity has been at the high end of the market, and is unaffordable for many renters. While new construction will slow, there continues to be value-add opportunities to renovate vintage product to meet the incredible demand for rentals, especially as homeownership declines.

“On the apartment supply side, an estimated 80% of new supply is in the class-A sector, which is unaffordable for many,” Mitch Siegler, senior managing director of San Diego-based Pathfinder Partners, tells GlobeSt.com. “There is considerable demand for more affordable options, which are being fulfilled by owners of older ‘70s to ‘90s apartments upgrading those properties. That remains the essence of Pathfinder’s investment strategy. Considerable supply of new apartments has been delivered during the past few years; we believe that 2018 will be the peak year for new supply for the foreseeable future.”

Kelsi Maree Borland

GlobeSt

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