Tag Archives: Green Street

Huge Boom in Multifamily Construction Coming in 2010

According to a recent report in the Wall Street Journal, multifamily housing starts will increase significantly in 2010. Green Street Advisors, a real estate research firm, says that REITs (real estate investment trusts) plan to put almost $1 billion into new apartment construction this year, a whopping 10 fold increase over the $100 million invested in 2009.

Construction on a building in Kansas City
Image via Wikipedia

Even though apartment vacancies are at a record high and unemployment remains a serious concern, the prospects for 2011 and 2012 are proving too inviting to pass by. Since construction has lagged for several years, the supply of new housing has greatly diminished. This fact, along with an improving economy are the two main reasons stated for the increased optimism about the next few years.

From 2012 through 2015, “apartment REITs may generate the best property net operating income growth that they’ve seen in a very long time, maybe ever,” said Haendel St. Juste, a REIT analyst with Keefe, Bruyette & Woods Inc.

Landlords also are excited about the potential for increased demand. The 20-to-34 age group, prime renting age, is expected to increase by five million in the next decade, according to Hessam Nadji, managing director of Marcus & Millichap, the nation’s second largest real-estate-investment brokerage firm. In addition, people who moved home or who moved in with roommates during the downturn also might look for their own apartments as the economy improves.

As an added incentive to developers, costs for lumber, concrete and labor have all dropped at least 10% in the last two years. Another sign of optimism came from the Commerce Department, which announced multifamily housing starts rose by over 9% in January of this year. And architects are finally getting calls again after a year of pretty quiet phones.

This all bodes well for the timing of our development in an emerging market on the coast in North Carolina.