Apartment Demand Still Exceeds Supply

RICHARDSON, TX—Even as MPF Research reported earlier this month that apartment growth has moderated in recent months to more sustainable levels, the market intelligence division of RealPage Inc. said Friday that occupancies nationwide have reached a 16-year high. The third-quarter occupancy rate of 96.5% is just 30 basis points short of the all-time record of 96.8%, set during the tech boom of 2000.

“Many properties, especially communities at the middle-tier price point, are completely full,” says Greg Willett, chief economist with RealPage. “While an upturn in high-end deliveries is yielding more product availability in select spots, most new projects are moving quickly through the initial lease-up process.” Willett is scheduled to appear as one of a panel of experts during “The X Factor: Fundamentals of Economic Drivers,” which opens day two of the two-day RealShare Apartments conference scheduled for Oct. 19 and 20 in Los Angeles.

Q3 saw new demand reach 109,600 units nationwide, well above the 77,974 apartments that were completed during the quarter. That was the case even as the quarter saw a higher volume of completions than any other in the current cycle. Over the past year, demand totaled 276,485 units, compared to 261,345 units that were completed.

Near term, the pace of construction is expected to hold steady, although MPF notes a recent slowdown in the number of apartment units authorized by building permits. Properties totaling 555,121 units are under construction across the country's 100 largest metro areas, and the annual pace of completions is expected to peak around the middle of 2017.

Among individual large metros, Nashville registers the most aggressive building pace relative to its existing product inventory. Ongoing construction of 15,627 units is predicted to grow Nashville's stock by 11.9%. At the next tier of activity, inventory growth of 7% to 8% is coming for Dallas, Charlotte and Austin.

In those two markets at least, rent growth is in line with the pace of deliveries. Nashville has the nation's sixth fastest-growing rents for new residents with 7.3% over the past year, while Dallas is tied with Los Angeles for eighth place, with 6.8% growth for both metros. Rent growth across the US remains well above the long-term historical norm of just under 3% annually.

On a nationwide basis, “Retention of current renters remains a big factor in the favorable balance between demand and supply in the apartment sector,” Willett says. “With loss of renters to home purchase holding below the historical norm, the limited churn of residents is helping keep the occupied apartment count high.”

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.

RICHARDSON, TX—Even as MPF Research reported earlier this month that apartment growth has moderated in recent months to more sustainable levels, the market intelligence division of RealPage Inc. said Friday that occupancies nationwide have reached a 16-year high. The third-quarter occupancy rate of 96.5% is just 30 basis points short of the all-time record of 96.8%, set during the tech boom of 2000.

“Many properties, especially communities at the middle-tier price point, are completely full,” says Greg Willett, chief economist with RealPage. “While an upturn in high-end deliveries is yielding more product availability in select spots, most new projects are moving quickly through the initial lease-up process.” Willett is scheduled to appear as one of a panel of experts during “The X Factor: Fundamentals of Economic Drivers,” which opens day two of the two-day RealShare Apartments conference scheduled for Oct. 19 and 20 in Los Angeles.

Q3 saw new demand reach 109,600 units nationwide, well above the 77,974 apartments that were completed during the quarter. That was the case even as the quarter saw a higher volume of completions than any other in the current cycle. Over the past year, demand totaled 276,485 units, compared to 261,345 units that were completed.

Near term, the pace of construction is expected to hold steady, although MPF notes a recent slowdown in the number of apartment units authorized by building permits. Properties totaling 555,121 units are under construction across the country's 100 largest metro areas, and the annual pace of completions is expected to peak around the middle of 2017.

Among individual large metros, Nashville registers the most aggressive building pace relative to its existing product inventory. Ongoing construction of 15,627 units is predicted to grow Nashville's stock by 11.9%. At the next tier of activity, inventory growth of 7% to 8% is coming for Dallas, Charlotte and Austin.

In those two markets at least, rent growth is in line with the pace of deliveries. Nashville has the nation's sixth fastest-growing rents for new residents with 7.3% over the past year, while Dallas is tied with Los Angeles for eighth place, with 6.8% growth for both metros. Rent growth across the US remains well above the long-term historical norm of just under 3% annually.

On a nationwide basis, “Retention of current renters remains a big factor in the favorable balance between demand and supply in the apartment sector,” Willett says. “With loss of renters to home purchase holding below the historical norm, the limited churn of residents is helping keep the occupied apartment count high.”

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.