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
| Jan 24, 2014
Urban Land Institute, Enterprise outline issues in rental housing shortage: Report
Bending the Cost Curve: Solutions to Expand the Supply of Affordable Rentals outlines factors that impede the development of affordable rental housing – causing the supply in many markets to fall far short of the demand.
| Jan 22, 2014
SOM-designed University Center uses 'sky quads,' stacked staircases to promote chance encounters
The New School's vertical campus in Manhattan houses multiple functions, including labs, design studios, a library, and student residences, in a 16-story building.
| Jan 13, 2014
Custom exterior fabricator A. Zahner unveils free façade design software for architects
The web-based tool uses the company's factory floor like "a massive rapid prototype machine,” allowing designers to manipulate designs on the fly based on cost and other factors, according to CEO/President Bill Zahner.
| Jan 8, 2014
Strengthened sprinkler rules could aid push for mid-rise wood structures in Canada
Strengthened sprinkler regulations proposed for the 2015 National Building Code of Canada (NBCC) could help a movement to allow midrise wood structures.
Smart Buildings | Jan 7, 2014
9 mega redevelopments poised to transform the urban landscape
Slowed by the recession—and often by protracted negotiations—some big redevelopment plans are now moving ahead. Here’s a sampling of nine major mixed-use projects throughout the country.
| Jan 3, 2014
World’s tallest vegetated façade to sprout in Sri Lanka [slideshow]
Set to open in late 2015, the 46-story Clearpoint Residences condo tower will feature planted terraces circling the entire structure.
| Dec 31, 2013
BD+C's top 10 stories of 2013
The world's tallest twisting tower and the rise of augmented reality technology in construction were among the 10 most popular articles posted on Building Design+Construction's website, BDCnetwork.com.
| Dec 27, 2013
$1 billion 'city within a city' development approved by Coachella, Calif., city council
The mega development includes 7,800 homes, a retail center, office space, and nearly 350 acres of open space.
| Dec 23, 2013
MBI commends start of module setting at B2, world's tallest modular building
The first modules have been set at B2 residential tower at Atlantic Yards in New York, set to become the tallest modular building in the world.
| Dec 20, 2013
Can energy hogs still be considered efficient buildings? Yes, say engineers at Buro Happold
A new tool from the engineering firm Buro Happold takes into account both energy and economic performance of buildings for a true measure of efficiency.
