In spite of concerns about overbuilding, multifamily developers continue to plan new apartment projects in metro areas that have seen the influx of thousands of new apartment units in recent years.
“Developers still really like the 15 or so metros that have accounted for half the country’s completions,” says Greg Willett, chief economist for RealPage Inc., a provider of property management software and services. “That makes sense. The apartments that have been built to date generally have been readily absorbed and are generating very high rents.”
However, developers are becoming more cautious about building in top markets than they have been previously.
“Developers are more attuned to the pipeline than they were two years ago,” says John Sebree, Chicago-based director of the national multi housing group with brokerage firm Marcus & Millichap. “This late in the real estate cycle, the margin for error is probably a little less.”