Apartment Construction Falls 12% Amidst Lingering COVID-19 Uncertainty
There are 283,000 new apartment units expected to hit the market this year, which is much less than a peak in 2018, said the report by RENTCafe Blog.
The current downward trend mimics the hit from the 2008 economic recession, according to the article by Florentina Sarac, “Apartment Construction in 2020 at 5-Year Low Nationally, Down 12% from the previous year.”
The report is based on data from Yardi, which included information on large apartment buildings of 50 or more units. To draw comparisons, in 2019, there were 321,000 added units, but this year, projections suggest we will hit close to only 283,000.
“The downtrend is mainly due to the slower pace of construction, as a result of a shortage of available construction crews, funding and permits, along with some temporary bans on construction projects in certain states,” Sarac states. “2020 has been a difficult year for the apartment industry, with more than half of developers reporting delays in construction due to the pandemic.”
Although many U.S. metro areas will see fewer new complexes, there are some cities that are going against the grain. Texas is a key example, as three of its cities are on the top-five list for new apartment units being introduced this year.
Dallas-Fort Worth in Texas will add the most apartments at more than 19,000 units. Next is New York, expected to add nearly 16,000 units. Houston is third, aiming for more than 10,400 apartment units. Atlanta will add 10,200 new apartments. Finally, Austin is expected to get more than 9,300 new units.
“Yet another indication of how slow construction has been this year, 13 of the 20 most active large metros are expected to complete fewer units compared to last year, while only seven metros are projected to build more,” said the report.
An example of 2019's most active metros, Miami, is seeing the biggest drop at nearly 53% in new apartment construction. Denver, which was the fastest-growing city in the United States at one point, is now seeing a 51% drop.
When it comes to how many apartments were completed in the first half of 2020, Texas cities dominated. Austin and San Antonio lead the way for completed projects. Denver, Charlotte, North Carolina, and Brooklyn also performed relatively well up until Q2 of this year.