Yardi Matrix has released its Q4 2023 Multifamily Supply Forecast, emphasizing a short-term spike and plateau of new construction. According to the report, Yardi finds that construction starts have remained "relatively robust" in the first half of 2023, with the under-construction pipeline increasing by 7.6% in Q3.
Because of this, new activity is starting to slow. The forecast for project completions has increased by 5.8% for 2024 and 6.2% for 2025. Completions for later years are forecasted to decrease by roughly 5 percent, according to Yardi.
Long-Term Multifamily Supply Forecast
"We continue to expect a mild recession will start in late 2023 or early 2024," the report states. Yardi's forecast for 2026 has therefore been reduced by 5.8% to 377,622 units, while the baseline forecast for 2027 and 2028 completions has been similarly reduced by 4.7% and 5.4% respectively.
For the multifamily markets monitored by Yardi Matrix, there are currently 1.2 million units within the under-construction pipeline. Of these units, just under 480,000 are in the lease-up phase, which is in line with the trailing six-month average of 483,000 units but represents a substantial 15.9% increase from the figures of the previous year. Most of these units are expected to be finalized either by the end of 2023 or during the first half of 2024.
What does this mean for 2024?
Though short-term construction starts remained elevated through the first half of 2023, several findings from the third quarter suggest that new development activity is slowing. The near flat growth recorded in Q3 is a sharp departure from the growth the planned pipeline recorded post pandemic—another sign that development interest is slowing, according to Yardi.
Overall, Yardi Matrix anticipates an uptick in construction completions in the next two years. Yardi's construction start data reached its year-over-year peak in May 2023. Both planned and prospective pipelines plateaued in Q3.
"Our baseline forecast envisions new supply bottoming in 2026 at around 377,000 units, while the alternative downside forecast models new supply bottoming in 2026 at 335,000 units," writes Ben Bruckner, Senior Research Analyst, Yardi Matrix.
Review the latest Multifamily Supply Forecast here.
Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, student housing, industrial, office and self storage property types. Email matrix@yardi.com, call 480-663-1149 or visit yardimatrix.com to learn more.
Related Stories
| Sep 15, 2014
Gen-Y-focused multifamily development under way in L.A.
The new urban residential community at 1001 S. Olive Street will offer open floor plans consisting of 64 studios, 109 one bedroom units, and 28 two-bedroom units, ranging in size from approximately 500 sq ft to 1,100 sq ft.
| Sep 9, 2014
Using Facebook to transform workplace design
As part of our ongoing studies of how building design influences human behavior in today’s social media-driven world, HOK’s workplace strategists had an idea: Leverage the power of social media to collect data about how people feel about their workplaces and the type of spaces they need to succeed.
| Sep 7, 2014
Behind the scenes of integrated project delivery — successful tools and applications
The underlying variables and tools used to manage collaboration between teams is ultimately the driving for success with IPD, writes CBRE Healthcare's Megan Donham.
| Sep 5, 2014
First Look: Zaha Hadid's Grace on Coronation towers in Australia
Zaha Hadid's latest project in Australia is a complex of three, tapered residential high-rises that have expansive grounds to provide the surrounding community unobstructed views and access to the town's waterfront.
| Sep 3, 2014
Ranked: Top local government sector AEC firms [2014 Giants 300 Report]
STV, HOK, and Turner top BD+C's rankings of the nation's largest local government design and construction firms, as reported in the 2014 Giants 300 Report.
| Sep 3, 2014
New designation launched to streamline LEED review process
The LEED Proven Provider designation is designed to minimize the need for additional work during the project review process.
| Sep 2, 2014
Ranked: Top green building sector AEC firms [2014 Giants 300 Report]
AECOM, Gensler, and Turner top BD+C's rankings of the nation's largest green design and construction firms.
| Sep 2, 2014
Extreme conversion: 17-story industrial silo to be converted to high-rise housing
As part of Copenhagen's effort to turn an industrial seaport into a bustling neighborhood, Danish architecture firm COBE was invited to convert a grain silo into a residential tower.
| Sep 2, 2014
Melbourne's tallest residential tower will have 'optically transformative façade'
Plans for Melbourne's tallest residential tower have been released by Elenberg Fraser Architects. Using an optically transformative façade and botanical aesthetic, the project seeks to change the landscape of Australia's Victoria state.
| Sep 1, 2014
Ranked: Top federal government sector AEC firms [2014 Giants 300 Report]
Clark Group, Fluor, and HOK top BD+C's rankings of the nation's largest federal government design and construction firms, as reported in the 2014 Giants 300 Report.
