Apartment Industry Continues to Focus on Increasing Supply

Preparing on his annual recap and outlook for a webinar hosted each year by a leading architecture firm, National Multifamily Housing Council President Doug Bibby didn’t have to do a lot of homework. The prospects for 2020 mirror much of that for 2019, which was nearly a carbon copy of 2018. Despite softening rents, he said, the near-term prospects remain solid, international capital is still very attractive to the multifamily housing industry, domestic debt and equity capital are abundant and underwriting remains conservative and getting deals done is still challenged by commodity prices, cap rates and the amount of capital available. Bibby’s key focus was a reminder of the industry’s plight to meet future housing needs and the aggressive 2017 plan of building and delivering 328,000 new apartments each year through 2030. “This is really important,” he said on Humphreys & Partners’ 11th Annual Kick-Off Webinar. “We have to build and deliver 328,000 new apartments per year, starting in 2017 and ending in 2030, to keep up with demand. We’ve got to get a much ramped up construction and delivery schedule going.” He noted that if you project out the rate of construction and delivery from 2011-2017 it would fall short of 2030 needs by about a million units. “We’ve only hit that 328,000 figure twice since the late 80s.” Actually, three times with a banner year in 2017 that approached 333,000. New supply has significantly increased each year since about 175,000 units were delivered in 2012, and more recently, volumes have approached NMHC’s goal, even though 2019 fell short of expectations. Until 2019, deliveries ascended over the 250,000 mark for five consecutive years. Deliveries in 2018 were 287,000, marking the fifth time that volumes were above 250,000. Last year, construction labor issues and other factors dragged a projection of 319,000 units to 246,779, based on the latest data b...