RICHARDSON, TX—On a metro area basis, a few individual cities in the top 10 markets for apartment permits posted impressive year-over-year gains in October. On the whole, though, permit totals are plateauing, says RealPage.
Citing Census Bureau data, RealPage says local governments across the country approved 416,000 apartment units in the year-ending Oct. 31. That permitting activity, including 40,087 units authorized during the month of October, represents a 13.4% increase over September's annual volume—which was down 17.4% from the previous month—and a 12.2% decline from October 2016's annual total.
Four of the top 10 metros—Los Angeles; Washington, DC; Chicago; and Atlanta—issued fewer multifamily permits in the 12 months ending in October than they did in the preceding 12 months. Of these, only Atlanta represented a double-digit percentage decline. With annual authorization volume down 27.6% Y-O-Y to 9,400 units, Atlanta's permitting activity is continuing to slow down from the peak it reached in '16, with the October annual total comparing to 9,828 units in July, 9,792 in August and 9.846 in September.
Conversely, Dallas and Denver both saw double-digit increases Y-O-Y in their annual volume. Dallas topped the rankings for permits issued in October, and that drove up the annual total. However, the city's 12-month tally of 22,061 permitted units remained below the 24,000 to 25,000 level seen from late 2015 to early '16. And RealPage says Denver's current totals remain elevated, relative to recent norms.
Although the actual total was less than a third of Dallas', the most eye-popping Y-O-Y gain in monthly permitting was achieved by another Texas city, Austin. The Texas capital's October total of 1.019 units was up 3,296.7% from the year-ago total. Yet the city's continuing run-up in supply has to led to flattening rent growth and a 1.5% Y-O-Y decline in occupancy levels as of the third quarter.
Not surprisingly, New York City remains the Y-O-Y leader for permitting volume and also leads in terms of deliveries scheduled for 2018, with 28,395 units slated to come on line. Part of that delivery total represents approximately 5,000 units that shifted from completion in '17 into next year.
RealPage reported in November that the cyclical peak for apartment deliveries is now Q1 of next year, as several properties have shifted their completion schedule. However, deliveries are still predicted to subside in the second half of next year, so '17 still has more identified supply in the apartment construction pipeline than '18.
Some 109,138 units have been identified for Q4 delivery as of late October, down 8,728 from the late-August figures. Meanwhile, 109,324 units are now expected to come on line in next year's first three months, about 13,746 more than were identified in RealPage's August update. From there, says RealPage, '18 deliveries from the apartment construction pipeline should moderate to a “still-robust” 93,784 units in Q2, 65,670 in Q3 and 56,815 in Q4.
On an annual basis, 356,037 units have been or will be delivered this year, RealPage said in November. That's 25,200 fewer than were identified in August. Meanwhile, Identified '18 deliveries have increased by 44,454 to 325,593, thereby surpassing '16 as the second highest completions year during this cycle.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
