Multifamily construction starts are tapering off as developers face diminishing access to capital and slowing rent growth, according to a new report from Institutional Property Advisors (IPA), a division of Marcus & Millichap. Greg Willett, national director of research services at IPA, noted that building starts in the second quarter of 2023 totaled just under half the average volume recorded during the previous two years among 15 markets that account for over half of US ongoing apartment construction. Houston, Austin and Dallas-Fort Worth saw the largest year-over-year decline in project initiations during Q2 with levels less than one third their year-ago levels. Slowdowns were also pronounced in Philadelphia, Denver and Washington DC.
The typical apartment property takes 18 to 24 months to complete so delivery volumes should begin waning early 2025 before dropping notably during last half of year according John Sebree national director Multi Housing Division at IPA . He added that rent growth is likely regain momentum spring 2024 when normal seasonal upturn leasing velocity coincides with signs today’s new supply excess is temporary leading robust price increases 2025 . Sebree and Willett discussed slowdown new construction among other topics Sept 7 webcast some nation’s largest institutional owners
