Top 5 Western Markets for Multifamily Deliveries
- Feb 13, 2020
Multifamily construction has been robust in recent years, with deliveries on a national level averaging 300,000 units per year since 2015. We’ve taken a look at the Western region—comprising Albuquerque, N.M.; Boise, Idaho; Colorado Springs, Colo.; Denver; Las Vegas; Phoenix; Reno, Nev.; Salt Lake City; and Tucson, Ariz.—and selected the top five metros that had the most multifamily completions as a percentage of existing stock in 2019, according to Yardi Matrix data.
We’ve found that established and emerging tech markets—especially the ones that acted as strong magnets for companies looking to expand or relocate—attracted developers ready to boost local housing inventories. Combined, the total number of multifamily apartments delivered in the Western Region in 2019 reached 31,121 units. January and October held the top positions in the number of deliveries—during these two months combined, developers brought online about a quarter of the year’s total deliveries, or 4,371 and 4,586 units, respectively.
5. Reno, Nev.
Its proximity to Lake Tahoe and California, the lack of income tax and Tesla’s Gigafactory have resurrected Vegas’ little brother from a region flooded with foreclosures and turned it into a metro that attracts residents with high-paying job opportunities. Developers expanded the existing housing inventory by 2.5 percent in 2019, adding 1,281 units, with the development pipeline counting more than 4,200 units in early February 2020.
Last year’s largest delivery in Reno was Sierra Vista, a Kromer Investments asset completed in September and totaling 336 units. The community features one- to three-bedroom floorplans averaging 1,118 square feet. In a nod to the Tesla factory in the metro, the property is equipped with electric charging stations.
Phoenix has experienced strong population growth, thanks to its attractive climate lacking natural disasters, pro-business environment and robust talent pool coming from Arizona State University. Moreover, the metro is establishing its position as a bioscience market, home to Barrow Neurological Institute, the largest neurological disease treatment and research facility in the world, with more than $3 billion in capital expenditures planned over the next two years. This has pushed up demand for housing, and construction has been intense in recent years, as the state still has abundant land ripe for development.
Since 2016, nearly 32,000 units came online, with 8,874 delivered in 2019, a new cycle high. The figure represents 2.8 percent of total stock. The largest community delivered in the metro in 2019 was Camden Property Trust’s 441-unit Camden North End, located at 6800 E. Mayo Blvd., with a unit mix including one- to three-bedroom apartments that average 921 square feet. Completed in March, the asset was 78.7 percent occupied in December and has a 343-unit second phase underway that is slated for completion by year-end.
3. Colorado Springs, Colo.
With an economy primarily driven by the military, high-tech industries and tourism, Colorado Springs is Denver’s more affordable sibling. As such, the metro has started attracting both Denverites and millennials from various parts of the country, putting pressure on developers to boost the housing inventory. In 2019, completions stood at 2.9 percent as a percentage of stock, equal to 1,217 units.
Construction activity was most intense in the northern part of the metro, where the largest community delivered last year—the 280-unit Springs at Allison Valley, a Continental Properties asset—was completed in February. The asset comprises one- to three-bedroom apartments ranging from 623 to 1,430 square feet, with an occupancy rate of 93.9 percent as of December.
Denver’s sustained supply growth stemmed primarily from its recognized tech center status. Its business-friendly environment and highly educated workforce kept the professional and business sector in the leading position in jobs added in 2019. To keep up with sustained demand for apartments, developers expanded the housing inventory by 4.4 percent in 2019, or 12,464 units, following the cycle peak in deliveries recorded in 2018, when more than 16,100 units came online.
Considering the robust development pipeline, construction activity will likely remain elevated in 2020, which will be visible in the number of units delivered by the end of the year. We expect some 11,500 units to be added, accounting for 4.2 percent of existing stock. Last year’s largest delivery was The Henry, a 403-unit asset owned by Carmel Partners that features studios and one- and two-bedroom apartments averaging 847 square feet, completed in July and 91.3 percent occupied as of December.
1. Boise, Idaho
Boasting a high quality of life, low taxes, a stable job market and a bountiful variety of outdoor attractions, Idaho’s capital is increasingly popular among Californians priced out of Pacific border states. The housing costs in Boise are incomparably lower than San Francisco and its equally expensive neighboring cities and will continue to be so despite sustained in-migration in recent years. Rents here averaged $1,174 in 2019, more than $200 below the national average, while the average per-unit price stood at $142,000.
This consistent demographic expansion has boosted housing prices, both for those looking to buy as well as for renters, so developers expanded the existing stock by 5.3 percent in 2019, or 1,258 units. The largest community delivered in 2019 in Boise was the 280-unit Prelude at Paramount, a The Pacific Cos. asset, completed last November in the Meridian submarket.