LAS VEGAS – (Realty News Report) – Multifamily starts are predicted to fall in 2023, following an unsustainable high level of production last year, according to the National Association of Home Builders (NAHB).
Multifamily construction boomed in 2022, up an estimated 15% from the previous year and exceeded a 500,000 annual pace—the first time since the Great Recession. However, NAHB is projecting that multifamily starts will fall 28% this year to a 391,000 total and will stabilize in 2024 at about 374,000 starts.
“Slowing rent growth, rising unemployment, tightening commercial real estate financing conditions and a substantial amount of supply in the construction pipeline have caused a large backlog of multifamily developments,” said NAHB Assistant Vice President for Forecasting and Analysis Danushka Nanayakkara-Skillington at a press conference held Tuesday at the NAHB International Builders’ Show in Las Vegas.
There are currently 943,000 apartments under construction, up 24.9% compared to a year ago (755,000). This is the highest count of apartments under construction since 1974.
Dinerstein Announces 400-Unit Project
Meanwhile, Houston developer, The Dinerstein Companies on Tuesday announced plans to develop a 394-unit multifamily project in the Phoenix area, in a partnership with PCCP.
The 400,000-SF development will carry Dinerstein’s new “Atlas” brand. The Atlas Mesa, located in the Mesa, Ariz., will have studio, one-, two- and three-bedroom apartments ranging from 562 to 1,394-SF.
The project will break ground in June with initial occupancy slated for the first quarter of 2025 and final completion scheduled for late 2025.
“We are proud to develop our first multifamily development in Mesa,” said Josh Vasbinder, West Coast Partner at The Dinerstein Companies. (Dinerstein recently entered the single-family build-to-rent (BTR) sector with its Inspire Homes.)
The Phoenix area is one of the strongest apartment markets in the nation, according to NAHB research.
Top Apartment Markets: NAHB
Eight of the top 10 multifamily markets, as measured by the number of permits, posted yearly increases from November 2021 to November 2022. The New York-Newark-Jersey City region, the largest in the nation, registered a 9% increase in permits, while Atlanta-Sandy Springs-Roswell, Ga., had the highest increase at 203%. The following markets all posted gains as well: Dallas-Fort Worth-Arlington, Texas; Houston-The Woodlands-Sugar Land, Texas; Los Angeles-Long Beach-Anaheim, Calif; Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.Va.; Phoenix-Mesa-Scottsdale, Ariz.; and Minneapolis-St. Paul-Bloomington, Minn.-Wis. The markets in Austin-Round Rock, Texas, and Seattle-Tacoma-Bellevue, Wash., posted declines compared to the previous year.
Speaking at a Las Vegas press conference staffed by Realty News Report, Nanayakkara-Skillington noted that regulations greatly affect multifamily development costs, referencing research conducted by NAHB and the National Multifamily Housing Council.
“Apartment and condo developments can be subject to a significant array of government regulations including zoning requirements, building codes, impact fees, permitting requirements, design standards and public land requirements, among others,” said Nanayakkara-Skillington. “These regulations are exacerbating the nation’s housing affordability crisis.”
Feb. 1, 2023. Realty News Report Copyright 2023
Rendering of Atlas Mesa project: Courtesy Dinerstein
THE RALPH BIVINS PROJECT PODCAST
LISTEN: THE RALPH BIVINS PROJECT podcast with Cathy Treviño, chair of HAR
LISTEN: THE RALPH BIVINS PROJECT podcast with Rusty Tamlyn of JLL Capital Markets