January 17, 2020
Continuing a development boom that saw delivery of more than two million apartment units over the past decade, the volume of annual completions will climb further as the 2020s begin, according to real estate technology and analytics firm RealPage, Inc. Scheduled deliveries this year jump to 370,942 units, up 50% from the 2019 total of 246,779 units.
The continued fast pace of completions, though, has implications for apartment fundamentals. “Developers have struggled to produce enough new housing to meet demand in recent years,” said chief economist Greg Willett at RealPage. “However, the volume of apartments on the way in 2020 certainly could test the market’s ability to absorb a big block of additional units in a short time frame.
“The big jump in deliveries during 2020 means it’s likely that occupancy will slip a little from 2019’s record level,” he added. “Pricing concessions, including periods of free rent, should be common at the new properties building an initial base of residents. Rent growth should slow for existing luxury projects in neighborhoods where construction is heaviest.”
Dallas/Fort Worth—the metro area that’s home to RealPage and the leader for apartment construction throughout the current economic cycle—again will be the front-runner in 2020. Scheduled completions in North Texas total about 26,000 units, up 14% from the 2019 volume.
Other key construction centers this year include Los Angeles, Washington, D.C. and Houston, set to add some 16,000 to 18,000 units apiece. The three metro areas are among the locations where deliveries will climb the most, since completions scheduled for 2020 roughly double new supply finished during 2019.
This year’s additions also should come on stream at twice the 2019 pace in Boston, where new supply is anticipated at more than 11,000 units. At the other end of the spectrum is New York City, where year-over-year growth in deliveries will increase by just 1%.
In all, ongoing apartment construction in the U.S. tallies at 554,000 units, including roughly 183,000 units already underway for completion in 2021. RealPage says that 2021’s new supply figure will grow as building begins at additional properties during the next few months.
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