From our joint venture partners at Cushman & Wakefield, Sam Tenenbaum, Head of Multifamily Insights, provides an in-depth look at the state of the multifamily construction market today, and how the current supply pipeline is causing a ripple effect for apartment housing demand nationwide:
The U.S. multifamily market is in the midst of the largest supply wave in modern history. But construction timelines are longer than ever, meaning the market has more time to absorb these deliveries. With supply risk distributed across the U.S., overbuilding is just as much a function of demand as it is supply.
Cushman & Wakefield's key takeaways from its analysis:
- Two-thirds of construction today is mid or high-rise, a significant divergence from 2000-2015 construction, when two-thirds of construction was garden style.
- Challenges in financing, as well as rising construction costs, have put pressure on development proformas, putting downward pressure on starts.
- Most markets with large pipelines today are high-growth markets that have benefitted from outsized in-migration in the wake of the pandemic. These markets typically see outsized demand, meaning aggregate construction figures may overstate the supply risk.
- The U.S. housing shortage likely means vacancies will rise in the near term but fall quickly as new supply is absorbed.
To read the full analysis from Cushman & Wakefield, click HERE.