Based on industry panelists' comments made at the National Association of Home Builders (NAHB) International Builders' Show (IBS) in Las Vegas this week, the multifamily market has had strong demand in recent years and is set to remain that way in 2015, despite certain headwinds that could affect the industry.
The number of multifamily apartments forecast to be built is likely to reach a sustainable level that is higher than the levels of production in the past. As the industry reaches that new plateau, the pace of construction is likely to level off in 2015 and into 2016.
"The multifamily industry is strong and producing more units than in previous cycles," said NAHB Chief Economist David Crowe. "The industry has shown dramatic increases in construction since the recession, but the level of increase will moderate as we approach equilibrium. We are forecasting that 358,000 units will be developed in 2015 and 361,000 units in 2016. One of the indicators for our forecast is NAHB's Multifamily Production Index, which is a survey of our members' attitudes toward the market. They have been telling us that the market is very strong and is expected to stay that way for the foreseeable future."
Although Dr. Crowe and other panelists are optimistic about the future of multifamily housing market, there are still challenges that face the industry such as increasing costs and availability of labor. But demand for apartments is strong enough for developers to proceed in most markets, the panelists noted.
One of the markets in particular within the multifamily industry that has strong demand is affordable rental housing. "There are many families in America that have a great need for affordable housing," said Mike Costa, president and CEO of Highridge Costa Housing Partners LLC in Gardena, Calif. "We have a long waiting list for our apartments at all of our communities. There is a need for us to be building more."
Panelists also discussed the current design and amenity trends that they are seeing in the industry. "Green and energy-efficient features and building practices continue to be popular, including high-efficiency appliances and mechanical systems, green roofs, locally sourced building materials and the recycling of construction waste," said Sanford Steinberg, AIA, CGP, principal of Steinberg Design Collaborative LLP in Houston. "On the market-rate side, apartment and condo buildings are also including unique features and services like bike storage rooms with equipment for bike maintenance, dog washing and grooming areas, larger bathrooms with separate shower and tub, open floor plans and high end finishes similar to custom homes."