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
Building Enclosure Systems | Mar 13, 2013
5 novel architectural applications for metal mesh screen systems
From folding façades to colorful LED displays, these fantastical projects show off the architectural possibilities of wire mesh and perforated metal panel technology.
| Mar 6, 2013
Dual towers designed by SHoP create new affordable housing in NYC
With the construction of Hunters Point South, New York City will get its first large new housing development for middle-class families in more than 30 years. Related Companies is partnering with the nonprofit Phipps Houses in the project, designed by SHoP Architects with Ismael Leyva Architects.
| Mar 6, 2013
German demonstration building features algae-powered façade
Exterior of carbon-neutral demonstration building consists of hollow glass panels containing micro-algae "farms."
| Mar 4, 2013
Gehry unveils design for Santa Monica hotel-condo tower
If all goes as planned, Frank Gehry will design the first building in his hometown in some 25 years.
| Mar 3, 2013
Hines acquires Archstone's interest in $700 million CityCenterDC project
The Washington D.C. office of Hines, the international real estate firm, announced the acquisition of the ownership interest of their partner, Archstone, in the mixed-use CityCenterDC project that is currently under construction in downtown Washington, D.C.
| Mar 1, 2013
China mega developer enters U.S. market
China Vanke Co., Ltd., is making its debut in the U.S. property market with a joint venture high-rise condominium project at 201 Folsom St. in San Francisco, according to CoStar's Randyl Drummer.
| Feb 28, 2013
Novel multifamily solutions to be presented at New York Modular Construction Summit
The New York Modular Construction Summit will be co-hosted by the Modular Building Institute and Pratt Institute School of Architecture on May 16, 2013, in Brooklyn, N.Y.
| Feb 28, 2013
Lend Lease builds world's tallest timber apartment building
Construction giant Lend Lease recently put the finishing touches on Forté, a 10-story apartment complex in Melbourne, Australia's Victoria Harbour that was built entirely with cross laminated timber (CTL) technology.
| Feb 27, 2013
Bronx residents get LEED Platinum public housing complex, rooftop farm
The New York City Housing Authority has opened Arbor House, a 124-unit LEED Platinum complex in the Morrisania neighborhood of the Bronx.
| Feb 25, 2013
What end-users do (and don't) know about lighting technology (infographic)
The fifth annual SYLVANIA Socket Survey from OSRAM SYLVANIA finds that consumers are adjusting to new legislation and energy-efficient lighting options, with about half saying that they plan to switch to new lighting technologies.
