Markets across the United States are set for a boost in apartment construction, which can’t come soon enough with demand and rents surging.
Apartment deliveries are approaching a 50-year high nationwide, according to a report by RentCafe. The report, which leans on data from Yardi Matrix’s algorithm and centers on certificates of occupancy being issued, projects 420,000 apartment units will be delivered this year.
The figure is down 3,000 from last year, but marks the second projection above 400,000 units in 50 years.
While apartment construction is on the rise, the industry remains slowed by factors that arose in the wake of the pandemic.
“The construction industry is finally returning to pre-pandemic levels of activity but is still being hampered by three familiar challenges: labor shortages; material costs and availability; and supply chain issues,” said Yardi Matrix’s Doug Ressler.
Dallas-Fort Worth has been No. 1 in apartment deliveries in each of the last four years, but it is ceding the title to New York City. The Big Apple is estimated to have 28,000 units delivered this year, a 50 percent increase from last year. (The Bronx and Staten Island, where few units are built, were not counted toward the projection.)
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That’s a welcome development for the city, but does little more than make a dent. A study from AKRF at the beginning of the year identified a need for 560,000 units by 2030, including 227,000 units immediately.
Dallas ranks second in expected deliveries this year (23,000), down 10 percent from last year. It is followed by Miami (19,000), Austin (18,000) and Houston (17,000). Other notable metros in the top 20 of anticipated deliveries include Los Angeles in 10th place (11,000), Chicago in 16th (8,500) and San Francisco in 18th (7,400).
Half of the top 20 metros are experiencing a five-year peak in estimated apartment deliveries, including New York, Miami and Houston.
In terms of apartments actually completed in the first half of the year, Texas remains tops. Houston finished first with more than 4,700 units and Austin followed with 4,200. Miami ranked fourth with nearly 3,000 units, while Los Angeles, Queens and Chicago all had at least 2,100 units delivered.
The mid-year report from RentCafe does need to be taken with a grain of salt. A similar report released last year estimated 334,000 apartments would be delivered by the end of the year, but the total ended up higher by nearly 90,000 units.