Even before COVID-19, apartments in some downtown locations were facing pressure from new supply. Eighty percent of 611,000 units under construction are at the top end of the market, according to CoStar Group.
"I think we've been talking about this on the multifamily side for a while," says CoStar Portfolio Strategy Senior Consultant Juan Arias. "There was going to be a significant supply overhang, specifically in luxury urban multifamily, if a recession came. They were building a lot of apartments. Before the pandemic, we were seeing a sufficient amount of demand coming in, but obviously, all bets are off at this point."
The pandemic has made things even worse. Downtown apartments—across all class levels—appear to be bearing the brunt of the pandemic impact, according to CoStar.
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Leslie Shaver
Les Shaver has been covering commercial and residential real estate for almost 20 years. His work has appeared in Multifamily Executive, Builder, units, Arlington Magazine in addition to GlobeSt.com and Real Estate Forum.
