There are over 1,400 large-scale rental apartment projects under construction in the biggest metros in the U.S. In buildings that will have 50 or more apartments, 321,177 units are projected to be completed by year’s end, representing a 50% increase over the 214,108 completions in 50-plus-unit structures in 2015, according to RENTCafé, a nationwide apartment search website.
This is the highest point for apartment construction in the past five years.
Apartment construction in the country's 50 largest metros is the highest it's been in five years. But with so much new inventory coming on line, rent appreciation has slowed in several of these markets. Image: RENTCafe
Drawing from data captured by its sister company, Yardi Matrix, RENTCafé examined the construction pipelines in the country’s 50 largest U.S. markets. It found that two Texas cities—Houston and Dallas—rank first and second among the top 20 hottest metros for apartment construction. Houston expects to deliver 25,935 apartment units in 95 developments this year. That total includes Tate at Tanglewood, which will add 417 units to Houston’s Galleria/Uptown submarket.
Greater Houston is expected to have nearly 26,000 new apartment deliveries this year. Texas's four largest metros combined should add 69,000 units. Image: RENTCafe
RENTCafé estimates that more than 69,000 new apartments will be delivered in Texas’s four largest cities, Houston, Dallas, Austin, and San Antonio, representing 22% of the total estimated increase in inventory within the 50 largest metros that include New York (21,177 deliveries), Los Angeles (20,205), and Washington D.C. (18,027).
One-bedroom apartments will account for more than half (51%) of the new rental stock that comes online this year. RENTCafé indicates that studio apartments rank lowest on developers’ preferences for bedroom distribution, whereas two-bedroom apartments are expected to account for 37.5% of new deliveries.
RENTCafé attributes low inventory levels and increased demand as the drivers of this construction boom. However, it cautions that “the plethora of new rental units coming online may finally turn the tables in the renters’ favor: where there’s choice, there’s competition and, in this case, competition translates into concessions, lower rents, and a more-relaxed housing landscape in general.”
The website points out that while average rents are at all-time highs, rent growth slowed in 2015 to 5.6%, and is projected to increase by only 4.4% this year.
RENTCafé also notes that hot rental markets like Washington D.C. have cooled over the past year. The city proper will see about 5,100 new apartment units this year, “furthering the prospect of an even more relaxed housing market in the future.”
In this competitive environment, rental properties are attracting tenants with deals and incentives. For example, JOYA, a 431-unit community under construction in Miami, has reduced its rates and is offering a rent-free month. Its amenities include a 3,000-sf 24-hour fitness center, a yoga studio, resident-reserved garage parking, and a resort-style pool.
That being said, RENTCafé expects Dallas to remain a hot rental market primarily because of its nearly 4% annual employment growth rate. In pricey San Francisco, nearly 9,500 apartment units are projected to be added this year, a 125% increase over 2015 completions, which could eventually provide some much-needed rent relief. (The average monthly rent in San Francisco is expected to rise by 8% to $2,469 this year.)
Is San Francisco is testing the limits of how much rent appreciation any market can bear. Image: RENTCafe
In other markets, like Sacramento, Portland, Ore., and Seattle, apartment construction still isn’t keeping up with demand.
It would appear that the country’s 50 largest markets are where the bulk of new-apartment construction is occurring. The Census Bureau estimated that, in June, apartment completions in structures with five or more units were tracking nationally at an annualized rate of 386,000 units, a 21% increase over Census’s June 2015 estimate.
Related Stories
| Aug 11, 2010
Old factory converted from hearth to home
A former briquette factory in Cologne-Frechen, Germany, was converted into a mixed-use building by Astoc Architects & Planners, Cologne, in association with Rheinischen Amt für Denkmalpflege—the Rhenish agency for historic preservation. The roughly 172,200-sf building includes a mix of residential condominiums, lofts, and leased commercial space.
| Aug 11, 2010
And the world's tallest building is…
At more than 2,600 feet high, the Burj Dubai (right) can still lay claim to the title of world's tallest building—although like all other super-tall buildings, its exact height will have to be recalculated now that the Council on Tall Buildings and Urban Habitat (CTBUH) announced a change to its height criteria.
| Aug 11, 2010
Luxury high-rise meets major milestone
A topping off ceremony was held in late October for 400 Fifth Avenue, a 57,000-sf high-rise that includes a 214-room luxury hotel and 190 high-end residential condominiums. Developed by Bizzi & Partners Development and designed by Gwathmey Siegel & Associates Architects, the 60-story tower in midtown Manhattan sits atop a smaller-scale 10-story base, which creates a street façade t...
| Aug 11, 2010
Mixed-use Seattle high-rise earns LEED Gold
Seattle’s 2201 Westlake development became the city’s first mixed-use and high-rise residential project to earn LEED Gold. Located in Seattle’s South Lake Union neighborhood, the newly completed 450,000-sf complex includes 300,000 sf of Class A office space, 135 luxury condominiums (known as Enso), and 25,000 sf of retail space.
| Aug 11, 2010
Triangular tower targets travelers
Chicago-based Goettsch Partners is designing a new mixed-use high-rise for the Chinese city of Dalian, located on the Yellow Sea coast. Developed by Hong Kong-based China Resources Land Limited, the tower will have almost 1.1 million sf, which includes a 377-room Grand Hyatt hotel, 84 apartments, three restaurants, banquet space, and a spa and fitness center.
| Aug 11, 2010
Brooklyn's tallest building reaches 514 feet
With the Brooklyner now topped off, the 514-foot-high apartment tower is Brooklyn's tallest building. Designed by New York-based Gerner Kronick + Valcarcel Architects and developed by The Clarett Group, the soaring 51-story tower is constructed of cast-in-place concrete and clad with window walls and decorative metal panels.
| Aug 11, 2010
RMJM unveils design details for $1B green development in Turkey
RMJM has unveiled the design for the $1 billion Varyap Meridian development it is master planning in Istanbul, Turkey's Atasehir district, a new residential and business district. Set on a highly visible site that features panoramic views stretching from the Bosporus Strait in the west to the Sea of Marmara to the south, the 372,000-square-meter development includes a 60-story tower, 1,500 resi...
| Aug 11, 2010
'Feebate' program to reward green buildings in Portland, Ore.
Officials in Portland, Ore., have proposed a green building incentive program that would be the first of its kind in the U.S. Under the program, new commercial buildings, 20,000 sf or larger, that meet Oregon's state building code would be assessed a fee by the city of up to $3.46/sf. The fee would be waived for buildings that achieve LEED Silver certification from the U.
| Aug 11, 2010
Colonnade fixes setback problem in Brooklyn condo project
The New York firm Scarano Architects was brought in by the developers of Olive Park condominiums in the Williamsburg section of Brooklyn to bring the facility up to code after frame out was completed. The architects designed colonnades along the building's perimeter to create the 15-foot setback required by the New York City Planning Commission.
| Aug 11, 2010
U.S. firm designing massive Taiwan project
MulvannyG2 Architecture is designing one of Taipei, Taiwan's largest urban redevelopment projects. The Bellevue, Wash., firm is working with developer The Global Team Group to create Aquapearl, a mixed-use complex that's part of the Taipei government's "Good Looking Taipei 2010" initiative to spur redevelopment of the city's Songjian District.