After more than nine consecutive years of steady growth, proposal activity in the U.S. Multifamily Housing market flattened in the 1st Quarter amid the COVID-19 crisis. The Quarterly Market Forecast (QMF) survey of architecture, engineering and construction (A/E/C) firms reported the first negative result for Multifamily since the 3rd Quarter of 2010.
Multifamily has consistently been one of the strongest performers among 58 submarkets measured in PSMJ Resources’ quarterly survey. This includes the 4th Quarter of 2019 when Multifamily’s Net Plus/Minus Index (NPMI) of 54% was the highest among all submarkets. Its NPMI slid to -2% in the 1st Quarter of 2020, as the percentage of respondents reporting a quarter-to-quarter decrease in proposal activity climbed from 4% to 31%.
PSMJ’s NPMI expresses the difference between the percentage of firms reporting an increase in proposal activity and those reporting a decrease over the three-month period. A consistent group of over 300 A/E/C firm leaders participate regularly, with 288 contributing to the most recent survey. It was conducted from March 24-30.
Despite the drop into the negative, Multifamily held up far better than three other Housing submarkets – Single-Family Properties (-31%), Single-Family Developments (-28%) and Condominiums (-28%) were among the 12 poorest-performing submarkets in the 1st Quarter.
Prior to this crisis, the consensus among industry economists and experts was that Multifamily would stay strong in 2020, albeit with some challenges to face. National vacancy rates were creeping up and much of the supply deficit had been filled. Nonetheless, significant amounts of investment money remained available and demand persisted in varying levels regionally. The fact that Multifamily proposal activity wasn’t as negatively impacted in the 1st Quarter as other Housing submarkets were, even with the COVID-19 crisis beginning to affect the market in March, suggests that it could recover comparatively quickly and seamlessly when and where restrictions are eased.
PSMJ Senior Principal David Burstein, P.E., AECPM, said he expects all housing markets to rebound after the health crisis passes and the record-low interest rates endure. “Pent up demand should make its presence felt by the end of the 3rd Quarter, and even more so in the 4th Quarter, especially if we see movement on an infrastructure bill.”
Multifamily’s performance in the QMF reinforces how consistently lucrative the sector has been for nearly a decade. After recording an NPMI of -5% in the 3rd Quarter of 2010, the Multifamily submarket experienced four consecutive quarters with a respectable NPMI between 20% and 26%. It jumped to a healthy 44% in the 4th Quarter of 2012 and remained at or above 42% for the next 28 quarters, all the way through 2019.
For the 4th Quarter of 2019, 58% of respondents said that proposal opportunities had increased in the Multifamily market, with only 4% reporting a decrease. For the 1st Quarter of 2020, increases were halved to 29%, compared with 31% that saw a drop in proposal activity.
Consulting and publishing firm PSMJ Resources, Inc., has been conducting the QMF survey each quarter since 2003. You can find more information at https://www.psmj.com/surveys/quarterly-market-forecast-2.
Related Stories
Multifamily Housing | Dec 11, 2018
62-story luxury rental tower provides 40,000 sf of indoor and outdoor amenities in Manhattan
CetraRuddy designed the building.
Multifamily Housing | Dec 6, 2018
JCJ Architecture to design new housing facility for Barrier Free Living
The non-profit’s new facility will provide housing and support services for survivors of domestic violence with disabilities.
Sponsored | Multifamily Housing | Dec 5, 2018
Apartment community connects friends and neighbors through indoor-outdoor amenities
Hubbard Place is a 44-story, 450-unit apartment community in Chicago’s River North neighborhood, an established tech hub in the downtown area. The building has an entire floor dedicated to communal and entertainment amenities.
Reconstruction Awards | Nov 26, 2018
Yarn works: Neverending yarn
111-year-old mill becomes a mixed-income multifamily community.
Multifamily Housing | Nov 20, 2018
Designs unveiled for new residential tower in Honolulu
Studio Gang pays homage to sugarcane plants that were once prevalent in this area.
Multifamily Housing | Nov 14, 2018
BIG’s ‘wooden hillside’ residential building in Stockholm officially opens
The building spans 270,000 sf.
Market Data | Nov 14, 2018
A new Joint Center report finds aging Americans less prepared to afford housing
The study foresees a significant segment of seniors struggling to buy or rent on their own or with other people.
Multifamily Housing | Oct 26, 2018
Future proofing multifamily housing amenities for Generation Z
How does a multifamily property developer or operator make a smart investment in amenities that will give the project long-term value?
Multifamily Housing | Oct 23, 2018
A threesome of transit-oriented projects
Developers and their project teams are recognizing the value of walkability, convenient neighborhood services, and transit access, as these three TODs demonstrate.
Wood | Oct 19, 2018
Design revealed for mass-timber residential tower in Milwaukee
The developer is confident that the city will approve construction, which is scheduled to start next year.