Still, labor and materials cost pressures will be an obstacle in building affordable, workforce and luxury apartments in the year ahead. Further compounding the problem is the hidden cost of additional time that reduced labor availability has added to NRP's construction schedules.

"It is harder to meet our required metrics with extended unit deliveries," Currall says.

These higher construction costs make it harder to pencil out deals in urban areas. "Urban submarkets will experience oversupply this cycle and, with their higher costs, that will make it difficult to earn strong returns," Currall says. "We feel that continued rent growth will be in transit-oriented or mixed-use suburban properties with lower construction basis."

If the trade truce persists, tariffs shouldn't be a big problem in the year ahead. "As existing tariffs are already priced into the costs of new projects, only a re-escalation will present a problem," Currall says. "Any reduction will result in savings to many properties that already capture tariff costs in their budgets."

As construction costs have made it more difficult to pencil out new development deals, value-add is an ever-diminishing pool of attractive opportunities, according to Currall. "Strong competition on the acquisition side has pushed most of the value to the sellers, rather than giving developers and investors a lot of upside," he says. "We focus on ground-up development where we can create more value."

While apartment owners often fret about interest rates going into any year, Currall expects the Fed to stand down in 2020, given that it is an election year. In fact, he says the decrease in interest rates last year has not been fully absorbed by the market.

"Spreads expanded over the last 10 years to keep caps stable," Currall says. "If rates stay low through the first part of 2020, you will see that spread compress and cap rates will fall. Lower financing cost will permit buyers to justify higher prices."