There remains a great need for more multifamily units. It will take years to catch up after the effects of underbuilding in the 2010 – 2014 timeframe. The relative scarcity of multifamily units helps to underpin apartment prices. It is a great time to own, reposition or invest passively in apartments.
As builders rush to catch up with years of under building, the trends in building size are changing. Most of the newly constructed units were in the 50 units and up range. 2018 shows a year over year increase in the number of units built in the 5 to 9 unit and 10 to 49 unit range. The minor decrease in newly-built apartments of 50 units or more from 2018 to 2019 is minor and not likely to affect the syndication business which thrives in the roughly 150 unit and up range. In fact, if you look at the long-term trend since 2000, the increase in larger properties is quite healthy and appears to have only been temporarily interrupted by the Great Recession.
The trend toward apartments with fewer units is likely to be supported by the recent move away from cities. As for whether this trend will continue given the COVID-19 vaccines that lie just over the horizon, we will just have to wait and see…
This article has been prepared for informational purposes only, and is not intended to provide, nor should it be relied upon for legal, tax, or accounting advice. You should consult your own legal, tax and accounting professionals. Do your own due diligence.
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