65 SHARES Facebook Twitter Whatsapp Linkedin Reddit Stumbleupon Pinterest

Article updated September 19, 2019.

Highlights:

Apartment construction slows down compared to last year, from 326,000 new deliveries in 2018 to a projection of under 300,000 in 2019.

Construction has been thriving in the last decade at 2.3M, but it’s no match for the impressive levels seen in the ’70s and ’80s.

New York metro is dethroned by DFW metro and Seattle metro in terms of projected apartments for this year.

Having exceeded expectations last year, apartment construction across the U.S. is projected to continue slowing down in 2019. According to Yardi Matrix market data, there will be an estimated 299,442 new units forecasted to be delivered this year. This marks a significant drop of 8.2% compared to 2018 when the total number of deliveries was 326,240, almost matching 2017’s 9-year peak of 331,765 new units.

Despite growing demand across the U.S., apartment construction started to face some challenges beginning with 2018. High construction costs and a narrow pool of skilled labor are just a few of the factors hindering the development of new apartment units.

2.34M apartment deliveries in the last decade, unparalleled growth since the ’80s

This decade’s much-touted apartment boom ends with a total of 2.34 million new apartments, still below the impressive construction levels of the ’70s and ’80s. In the ‘70s, close to 3M new apartments were built, followed by the ’80s with 2.64M units when the apartment market started witnessing a slowdown that continued in the following decade. In fact, between 1990 and 1999, apartment deliveries amounted to only 1.6M, but started to pick up speed in the ‘00s.

According to Tara Jeffcoat, senior research analyst at Yardi Matrix: “Rising construction costs and a tight labor supply certainly contribute to a flattening and decline of expected completions, but 2019 is part of a larger trend of developers gearing up for next cycle. Although completions peaked in 2017, there is a significant number of prospective properties in the pipeline.”

This decade (2010-2019) saw the highest number of new units delivered since the ’80s – 2.34M, and that’s mainly due to developers speeding up construction starting with 2015.

Rent growth is slowing down after picking up speed last year

Zigzagging since 2010, the average rent growth has hit the brakes in the last 6 months, witnessing a 2.7% increase since 2018 when it went up by 3.7%. The glut of new apartments built in the previous years could be one of the reasons for this slowdown, taking the wind out of rent increases.

The influence of new deliveries on rent growth is no new occurrence, as whenever supply was abundant, rent growth has weakened. A relevant example is the one between 2009-2011, when apartment construction hit its lowest numbers (decreasing from 228,300 to 110,300) while rent growth skyrocketed from -3.7% to 2.9%.

DFW metro surpasses Seattle and New York metros in the race for more apartment deliveries

This year, Dallas-Fort Worth metro leads with a total of 22,196 new units expected to be built, which will prove beneficial considering the 131,800 new residents that the metro added between 2017 and 2018 (based on U.S. Census estimates).

The runner-up Seattle metro, is also doing fairly well with a projected 13,682 units to be built this year, closely followed by last year’s front-runner, New York metro, which is planning to add 13,418 new units. Having built an impressive number of apartments in 2018, New York metro is expected to cool off a bit in 2019.

Compared to last year’s projections, Denver metro is taking it easy, with far fewer units expected to be delivered this year. In 2018, the metro occupied the third place in our top with an estimated 15,187 new units, while this year it’s expected to build about half of that – 6,836, taking the 12th spot in our top.

California, Florida, and Texas each feature three metros in the top 20, with Texas being represented by DFW metro, Austin metro, and Houston metro, which are higher up in the top occupying the first, fifth, and tenth place, respectively.

Portland metro, on the other hand, is last on the list, with a projection of 4,448 new units, which is close to last year’s estimate of 4,804. A possible reason for this low number could be the metro’s lack of available land, as well as the restrictive regulations in the area.

Fort Worth is DFW metro’s leading market for new construction

Fueled by job growth and, implicitly, by the number of new residents that the area gained, Fort Worth is leading the pack in apartment construction – projected to add 3,875 new apartments in 2019. Dallas, too, has a considerable number of new apartments in the pipeline – 3,859, followed by Frisco, with 2,548.

At the bottom of the list are both Irving and Waxahachie, with a low supply of new deliveries, 377 and 325, respectively.

Seattle is expected to add an impressive number of about 6,900 new apartments

With construction cranes spread across the city, Seattle is booming with new apartments. Our projected number of deliveries for 2019 is 6,854, which could mean a possible slowdown in rent growth. Given its strong economy, Seattle should encounter no issues filling up the newly built apartments as the area keeps creating new jobs.

Building considerably less than Seattle, Issaquah is the runner-up, with an estimated 509 new apartments for 2019. It’s followed by Newcastle, with an even lower number of 451 projected deliveries.

Bushwick is the hottest NY neighborhood for apartment deliveries this year

Home to more than 85,000 residents, Bushwick is expected to add 1,103 new units to its inventory. The apartments are likely to be snatched up by millennial renters who are big fans of this hot neighborhood. Jamaica and Astoria are also busy delivering a healthy supply of new units – 553 and 508, respectively.

Notably missing from the top this year is Long Island City, with over 3,000 apartments under construction with estimated completion dates set for this year. However, our projections show that these projects are unlikely to be fully completed this year and will roll into next year. Other New York neighborhoods busy with apartment construction, but not likely to be completed this year, are Lincoln Square, Murray Hill, and Williamsburg, each with some 800-900 units close to completion.

Construction-crazed Miami is delivering almost 7,000 new apartments in 2019

Miami is expected to build 6,989 apartments by the end of this year, by far surpassing all other cities in the metro. The rapid demographic growth contributing to a robust demand in apartments pushed Miami to almost double last year’s apartment delivery of 3,148 units.

Fort Lauderdale, on the other hand, is projected to build 1,343 units by the end of 2019, while West Palm Beach only 695.

Atlanta is building about 10 times more units than the other cities in the metro

Popular among millennials, Atlanta housing is in demand and developers are responding well to this, with the planned construction of 5,840 new units in 2019. This is similar to last year’s delivery of 6,119 which indicates the city’s struggle to keep up with demand caused by the surge in new jobs.

Outranking all other large metros, Detroit sees a 292% increase in apartment construction

Construction in Detroit metro is expected to witness a considerable spike compared to 2018. According to our projection, the metro is planning to increase its number of apartments by 292%, to a total of 1,856 new rental units. The reason why Detroit metro, in particular, is expected to build so much is that a big chunk of the projects started in 2018 got delayed, possibly due to a labor shortage in the area. As a result, many of these projects’ date of completion got pushed to 2019.

San Jose metro is also seeing an impressive change in the number of delivered units – of 283%, from 1,579 in 2018, to 6,044 this year.

2019’s Best and Worst Metros for New Apartments

Methodology

RENTCafe is a nationwide apartment search website that enables renters to easily find apartments and houses for rent throughout the United States.

To compile this report, RENTCafe’s research team analyzed new apartment construction data across 134 U.S. Metropolitan Statistical Areas. The study is exclusively based on apartment data related to buildings containing 50 or more units. Metros with less than 300 units or less than 2 properties/buildings were not included.

Apartment data was provided by our sister company, Yardi Matrix, a business development and asset management tool for brokers, sponsors, banks and equity sources underwriting investments in the multifamily, office, industrial and self-storage sectors. Apartment projections for the year 2019 are calculated based on a Yardi Matrix proprietary algorithm, and it includes confirmed and likely completions for 2019 based on the issuance of a certificate of occupancy. Apartment projections are estimates and subject to change. Actual apartment completion dates depend upon a variety of factors and may change.

Data on population changes from 2017 to 2018 comes from the U.S. Census Bureau.

Fair use and redistribution We encourage you and freely grant you permission to reuse, host, or repost the images in this article. When doing so, we only ask that you kindly attribute the authors by linking to RENTCafe.com or this page, so that your readers can learn more about this project, the research behind it and its methodology.

65 SHARES Facebook Twitter Whatsapp Linkedin Reddit Stumbleupon Pinterest