flexiblefullpage
billboard
interstitial1
catfish1
Currently Reading

Developers bullish about multifamily market for third consecutive quarter

Multifamily Housing

Developers bullish about multifamily market for third consecutive quarter

After increasing steadily over the past several years, multifamily production has now reached a healthy, sustainable level, according to NAHB Chief Economist David Crowe.


By John Caulfield, Senior Editor | March 10, 2015
Developers bullish about multifamily market for third consecutive quarter

Image courtesy EPA Smart Growth/Wikimedia Commons

Developers of multifamily apartment buildings remain mostly positive about their markets’ current conditions, according to the latest quarterly tracking data that the National Association of Home Builders released on February 26.

NAHB’s Multifamily Production Index (MPI), based on responses from 93 developers across the country, stood at 54, on a scale of 0 to 100, in the fourth quarter of 2014. The Index—a composite measure of developer sentiments about construction for low-rent units, market-rate rentals, and for-sale condos—registered above 50 for each quarter last year, and has been hovering at 50 or higher since the first quarter of 2013.

The latest reading “is in line with our view that the multifamily segment of the industry has largely recovered from the downturn,” said NAHB Chief Economist David Crowe. “After increasing steadily over the past several years, multifamily production has now reached a healthy, sustainable level.”

Developers’ attitudes are also reflected in their willingness to take on future projects. In January, permits issued for buildings with five or more units rose by 13.8% to an annualized rate of 372,000, according to the Census Bureau.

A closer look at the numbers finds that developers’ sentiments about current conditions for market-rate starts, at an index of 62, were more robust than their sentiments for either low-rent starts (52) or for-sale condo starts (50).

NAHB’s Vacancy Index, which measures the industry’s perception about apartment vacancies, stood at 39 in the fourth quarter of 2014, compared to 38 for the same quarter a year earlier. (The lower the index, the fewer the perceived vacancies.) Interestingly, developers perceived lower vacancies for Class B apartments compared to either Class A or C apartments.

Developers’ attitudes are also reflected in their willingness to take on future projects. In January, permits issued for buildings with five or more units rose by 13.8% to an annualized rate of 372,000, according to preliminary estimates released by the Census Bureau on February 18.

Multifamily starts in January were up 24.5% over the same month a year earlier to an annualized rate of 381,000 units. In 2015, NAHB expects multifamily starts ultimately to increase modestly to around 358,000. “Because of strong job growth, we expect to be able to keep building for the foreseeable future,” said W. Dean Henry, CEO of Legacy Partners Residential in Foster City, Calif., and chairman of NAHB’s Multifamily Leadership Board.

Financing projects should not be an issue, as more lenders are jumping into this sector. Banks and Commercial Mortgage-Backed Securities lenders increased their market share of lending for multifamily projects through 2014, and are expected to be even bigger players this year, as Fannie Mae and Freddie Mac pull back. “Capital is plentiful and many lenders are expanding their target markets for investments,” observed Faron Thompson, head of Jones Lang LaSalle’s multifamily debt finance team.

It’s worth noting, though, that Fannie and Freddie expect demand for multifamily housing to soften a bit over the next two years, and for most of the growth to occur in a limited number of metro markets.

Related Stories

| Aug 4, 2016

Top 110 Multifamily Architecture Firms

Perkins Eastman, CallisonRTKL, and Solomon Cordwell Buenz top Building Design+Construction’s annual ranking of the nation’s largest multifamily building sector architecture and A/E firms, as reported in the 2016 Giants 300 Report.

Multifamily Housing | Jul 20, 2016

Colorful Boston Road building offers affordable housing in the Bronx

Designed by NYC’s Alexander Gorlin Architects, the 12-story building will have 154 studio apartments for low-income working adults.

Multifamily Housing | Jul 18, 2016

Four residential projects named winners of the 2016 AIA/HUD Secretary Awards

Affordable housing, specialized housing, and accessible housing projects were honored.  

Multifamily Housing | Jul 14, 2016

Portland, Ore., City Council approves construction excise tax for affordable housing

Expected to raise $8 million annually on commercial and residential projects.  

Multifamily Housing | Jul 7, 2016

Courtyards make Brooklyn’s Bushwick II residential development its own miniature city

Bushwick II will feature light-filled plaza spaces, a roof for urban living, and more than 800 apartment units.

Market Data | Jul 7, 2016

Airbnb alleged to worsen housing crunch in New York City

Allegedly removing thousands of housing units from market, driving up rents.

Market Data | Jul 6, 2016

A thriving economy and influx of businesses spur construction in downtown Seattle

Development investment is twice what it was five years ago. 

Multifamily Housing | Jul 5, 2016

Apartments continue to shrink, rents continue to rise

Latest survey by RENTCafé tracks size changes in 95 metros. 

High-rise Construction | Jun 29, 2016

Best Tall Buildings around the world favor unusual shapes and hybrid functions

The Council on Tall Buildings and Urban Habitat selects winners in four regions.

Multifamily Housing | Jun 22, 2016

Can multifamily construction keep up with projected demand?

The Joint Center for Housing Studies’ latest disection of America’s housing market finds moderate- and low-priced rentals in short supply.

boombox1
boombox2
native1

More In Category


Curtain Wall

7 steps to investigating curtain wall leaks

It is common for significant curtain wall leakage to involve multiple variables. Therefore, a comprehensive multi-faceted investigation is required to determine the origin of leakage, according to building enclosure consultants Richard Aeck and John A. Rudisill with Rimkus. 



halfpage1

Most Popular Content

  1. 2021 Giants 400 Report
  2. Top 150 Architecture Firms for 2019
  3. 13 projects that represent the future of affordable housing
  4. Sagrada Familia completion date pushed back due to coronavirus
  5. Top 160 Architecture Firms 2021