By all accounts, 2015 is a very good year for the multifamily housing industry. Projected 2015 U.S. multifamily construction starts should top 455,000 units, or about $85.1 billion. That’s a 25 percent dollar increase over the torrid 2014 construction pace.
And 2016? Multifamily builders may throttle back a trifle, but only a trifle. The construction pace will still be frenetic. A surging rental marketplace – especially apartment-hungry Millennials (born 1982-2004) – will keep occupancy and rental rates high.
If anything, the stars have aligned like never before for multifamily builders. Mounting evidence reveals:
For the multifamily construction trade, the news could hardly be better. As Tim Sullivan, practice leader for Meyers Research LLC says, “Multifamily left single-family in the dust five years ago.” Another industry watcher seconds Sullivan’s stark conclusion. “Younger people, especially Millennials, are waiting longer to get married. We have renters who are staying renters,” reports Greg Willett, vice president of MPF Research.
The Harvard Joint Center for Housing Studies released a report last June that declares this decade will be “the strongest decade for renter growth in history.” The growing conclusion for local, regional, and, yes, national home builders? Follow the dollars. Some production home builders have already placed big bets:
As one regional home builder expanding their business into apartment construction puts it, “We are actually providers of shelter. Apartments are a large component of shelter.”
If you have all you can handle keeping up with new home orders, congrats and keep it up. If you’re looking to diversify your portfolio of construction services, as many home builders are, now is a great time to explore your multifamily options.