Multifamily has remained one of the most popular asset classes for developers and investors alike, despite lingering economic uncertainties. Due to the high demand for housing, construction was deemed essential amid the pandemic in most states across the country, and developers were able to forge ahead.
According to Yardi Matrix data, 27,543 units were delivered year-to-date in the Western U.S. The table below ranks the region’s metros based on completions as a percentage of existing stock, using Yardi Matrix data. The Top 5 markets combined represent almost all new completions in the Western region.
5. Colorado Springs
Completions in Colorado Springs marked a new cycle high in 2019, with seven projects delivered encompassing a total of 1,217 units. Although construction was deemed essential during the lockdown period, the number of units delivered during this year slightly contracted compared to 2019. Year-to-date, a total of four projects or 760 units came online, equal to 1.9 percent of the metro’s total inventory.
Crowne Partners completed the largest project in the city, bringing 276 units to the Northgate/Flying Horse submarket. The Class A asset is the company’s first completed property in Colorado Springs. Crowne Partners currently has another project underway in the metro—a 285-unit community just west of North Powers Boulevard in the East Norwood neighborhood.
Although the health crisis put some pressure on Phoenix’s economy, the metro’s rental sector has proven equipped to weather the storm. As construction sites remained open through the pandemic, developers pressed on. A total of 31 projects were delivered year-to-date, encompassing 7,517 units and equal to 2.4 percent of Phoenix’s existing inventory.
So far this year, the largest property completed was the 504-unit Sky at Chandler Airpark, a Class A development located at 1441 E. German Road in the Gilbert submarket. Management Support broke ground on the project in 2018, with help from a $46.5 million construction loan provided by City National Bank. Phoenix currently has 104 projects under construction, with 14 slated for delivery by the end of 2020, while most are expected to deliver during 2021.
3. Reno, Nev.
Nevada’s tourism-reliant economy has certainly felt the effects of the crisis, with both major metros in the state—Las Vegas and Reno—taking a heavy hit. Although Nevada started to reopen in mid-May, job gains remained low. In September, the state added some 3,400 jobs, according to the Nevada Department of Employment, Training and Rehabilitation, the Las Vegas Review-Journal reported.
However, due to strong housing demand, development activity continued at a steady pace in Reno. Year-to-date, developers delivered three projects totaling 1,330 units, accounting for 3.4 percent of total stock. Despite new supply coming in, the occupancy rate in stabilized assets remained unchanged year-over-year through September, at 95.6 percent, while the average rent was up by 3.3 percent year-over-year in September.
2. Salt Lake City
Thanks to its diversifying economy, Salt Lake City has fared relatively well compared to other U.S. metros. Developers added 3,800 units to the multifamily housing stock year-to-date, equal to 3.6 percent of existing inventory. The metro recorded a cycle peak in 2018 when a total of 6,060 units came online; annual deliveries were almost halved in 2019, with total completions dropping to 3,126 units.
The bulk of newly completed projects are concentrated in downtown Salt Lake City and the Central City submarket. SALT Development delivered the largest project downtown—the 453-unit Hardware Village, funded with a $74 million construction loan from JPMorgan Chase. In May, Oakmont Properties purchased the property with $150.2 million in acquisition financing provided by KBS Realty Advisors.
Although the pandemic affected Denver’s decade-long economic expansion, the metro’s multifamily market continued to perform well despite uncertainties. When it comes to the share of completed projects as a percentage of existing inventory, Denver ranked first with 55 projects encompassing 11,582 units. Year-to-date deliveries represented 4 percent of the metro’s total stock. Despite substantial new supply coming online, the average occupancy rate in stabilized properties slid by only 20 basis points year-over-year through September, to 94.5 percent.
Developers in Denver also favored the city’s downtown area and the surrounding neighborhoods. The largest project completed this year was Luxe at Mile High, a 382-unit luxury development in the CBD/Five Points/North Capitol Hill submarket, roughly 2 miles from downtown Denver. Global Asset Capital acquired the project from Embrey Partners for $145 million in early 2020.