Economy Watch: Apartment Development to Spike in Certain Markets
- May 07, 2018
The pace of U.S. apartment development has slowed down in many markets, but not all, according to a recent report by RealPage. Out of the nation’s 50 largest markets, slightly more than half will see apartment completions drop in 2018 compared to the year before. But in 10 large markets, supply in 2018 is expected to increase roughly 40 percent or more from the 2017 levels.
The largest supply increase predicted for 2018 is in Sacramento. Last year, 682 apartment units were completed there; this year, 1,614 will be, for an increase of 137 percent compared with 2017. Los Angeles will also see a large increase in the number of units completed this year: 6,456 in 2017 and 14,087 units this year, for an increase of 118 percent.
Other markets that will experience sizable supply increases this year, according to RealPage, include Denver, Providence, R.I., Cleveland, Columbus, Jacksonville, Newark, St. Louis and Phoenix.
For its part, Denver, is expected to see nearly 13,000 units come online in 2018— an 80 percent increase from the roughly 6,500 units completed in 2017. The upcoming deliveries should grow the metro’s existing inventory base 4.1 percent. Thus far, Denver has been able to absorb its increasing supply, with the metro ranking among the nation’s leaders for both construction activity and rent growth during the current cycle.
Phoenix is scheduled to see new supply of about 8,600 units in 2018, 39 percent above the 2017 volume. While recent development has been rapid, it hasn’t yet reached the pace seen in 2002, when deliveries were about 12,000 units. Occupancy is now about 3 points ahead of where it was at that time.