The slow pace of construction, crew shortages and construction bans that came with COVID-19 has cut apartment construction by 12%, according to a new report.
There are 283,000 new apartment units expected to hit the market this year, which is much less than a peak in 2018, said the report by RENTCafe Blog.
The downward trend is beginning to mirror the hit from the 2008 economic recession, according to the article by Florentina Sarac, "Apartment Construction in 2020 at 5-Year Low Nationally, Down 12% from Previous year."
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The report is based on data from yardi Matrix, which included information on large apartment buildings of 50 or more units. In 2019, there were 321,000 units, but this year, there will only be 283,000.
"The downtrend is mainly due to the slower pace of construction, as a result of a shortage of available construction crews, funding and permits, along with some temporary bans on construction projects in certain states," wrote Sarac. "2020 has been a difficult year for the apartment industry, with more than half of developers reporting delays in construction due to the pandemic."
Although many U.S. metro areas will see fewer new complexes, there are some cities that are bucking the trend. Texas is a main example: Three of its cities are on the top-five list for new apartment units this year.
For example, the Dallas-Fort Worth metroplex in Texas will see the most new apartments: more than 19,000 units. Next is New York, expected to see nearly 16,000 units. Houston is the third top city, getting more than 10,400 apartment units this year. The Atlanta metro is also top of the list, with 10,200 new apartments. Fifth is Austin, expected to get more than 9,300 new units.
"Yet another indication of how slow construction has been this year, 13 of the 20 most active large metros are expected to complete fewer units compared to last year, while only seven metros are projected to build more," said the report.
Another example, the Miami area, is seeing the biggest drop of 53% in new apartment construction. Denver is seeing a 51% drop.
When it comes to how many apartments were completed in the first half of 2020, Texas cities dominated. Austin and San Antonio lead the pack for apartment completions in that time period. Denver, Charlotte, North Carolina and Brooklyn also did well in the completed apartment metric.
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Angela Morris
Angela Morris is ALM Media's Texas litigation reporter. She covers lawsuits in all levels of Texas state and federal courts. Based in Austin, Morris earned journalism and government degrees from the University of Texas at Austin in 2006, and since then, has worked primarily as a reporter and writer, but also has skills in videography, photography and podcasts. Follow her on Twitter at @AMorrisReports.
