COVID-19’s impact on multifamily development varies widely by location. In the first of two parts, we draw on Yardi Matrix data to identify the sixth through 10th most active markets nationwide.
Multifamily fundamentals have taken a hit due to the COVID-19 pandemic, not just in declining asking rents, but also in dwindling construction trends. While multifamily development fared better in some parts of the country, other areas saw the construction sector take some dents. Using Yardi Matrix data, we’ve looked at the top 10 markets with the highest number of units that have started construction between January and May 2020, and compared them with the same period in 2019.
Six of the top 10 metros saw the number of multifamily developments and units drop significantly. West Houston fared the worst, with its new inventory dropping by more than 3,000 units compared to January 2019 through May 2019. Still, health-care crisis notwithstanding, the country’s housing woes haven’t relented. Four of the markets show an increased volume of units that broke ground in the first five months of 2020. Below, we’ve analyzed the lower five entries of our top 10 list.
10. URBAN ATLANTA
Overall, in June 2020, the market had more than 15,000 units in 57 projects under construction, 9,600 of which were slated for completion by year’s end. In 2019, Atlanta marked a 1.2 percent year-over-year demographic expansion, well above the 0.3 percent national rate. The metro’s rapidly rising population maintains its robust demand for housing. The development boom of recent years has continued, sustained by Mayor Keisha Lance Bottoms, who deemed the sector an essential service following the COVID-19 outbreak
9. MIAMI
With an economy heavily dependent on tourism, Miami’s multifamily market faces a challenging year ahead, as one-third of its labor force is in high-risk sectors impacted by the pandemic. In addition, a consistent portion of the multifamily and condos inventory caters to foreign occupants, and demand from this group has also decreased considerably as a result of the virus. Still, multifamily development had more than 19,500 units in 66 properties underway in June, of which about half are estimated to come online by the end of the year. Like the rest of the country, the health crisis is expected to cause delays across all property types currently under development
8. WEST HOUSTON
COVID-19 and the global oil crisis have pushed oil prices to an 18-year low, and the impact on the energy sector has had a ripple effect throughout the metro. In June, there were more than 19,000 units under construction, and more than half have a completion date set for 2020. However, even though construction was deemed essential following the outbreak, delays will likely occur as, in addition to disruptions in the supply chain, many developers had temporarily closed their doors
7. TAMPA
Tampa had nearly 12,000 units in 51 properties under construction, as of June. Roughly 4,000 units of these are slated for completion by the end of the year
6. ORLANDO
The health crisis is already leaving its mark across the metro’s economy. Travel restrictions and stay-at-home orders isolated the metro, and Walt Disney World and Universal Orlando furloughed, laid off and reduced paychecks of tens of thousands of employees. This has spilled over into the multifamily market’s rent growth, down 0.4 percent year-over-year through April, marking the steepest decline among major U.S. metros
