Search
 

The Game of Patience and Strategy

Today's poor fundamentals and weak construction levels may be demoralizing, but those willing to wait a few years are positioned to reap major rewards.

By Sule Aygoren Carranza | Updated on July 28, 2009

AUSTIN, TX-After weathering the recession relatively well, compared to its single-family counterpart, the national apartment construction levels have spiraled downward over the course of this year. No doubt, the rising vacancy level and the tighter financing climate have played a large role in halting new development. And with conditions expected to continue for some time, permitting activity and new construction will likely remain low through at least 2010, if not longer.

As a result, contends Richard Moody, chief economist and director of research for Forward Capital LLC, new apartment deliveries will remain low into 2012 and beyond. If this scenario plays out, it’s not necessarily bad news for multifamily players, since an improved economy, job growth and demographic shifts will converge to increase the demand for rental housing.

Whereas single-family construction permits, starts and completions peaked in 2005 and 2006 and then trailed-off, apartment developers remained relatively restrained between 1998 and 2008. During this timeframe, slightly more than 300,000 multifamily units were delivered to the market on an annual basis. Permits and starts were on par with that figure. Yet while development remained stable, most of that product consisted of for-sale condominium units, and rental product accounted for a lower share than usual.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.