In the last few years we have seen a once-in-a-generation surge in multifamily new construction. This is also one of the few times where the new construction has not just been centered on one region of the country. We are even seeing new activity in markets like Memphis and New Orleans that have, until recently, been struggling. Markets in Texas, California, Florida and the Washington DC area have been hotbeds of activity in the last few years. Fortunately, we are finally seeing some brake tapping in some of those markets.
Overall we are currently tracking over 7800 projects with over 1.3 million units. New York City and the Washington DC area each still lead the pack with over 80,000 units in the pipeline. Of the 1.3 million units we are tracking, about 100,000 have been put on an indefinite hold. While this is a small figure it is much higher than in years past. Houston, Dallas and Austin are finally tabling dozens of projects and the Florida markets are starting to postpone several projects each as well.
Houston, especially, will have a tough time absorbing the new units that are already under construction. Over 46,000 units are in construction or lease-up and about 34,000 of those are already leasing. Considering the Houston market only absorbed about 6500 units in the last 12 months it will take considerable good fortune to get those new properties stabilized any time soon. While the other Texas markets have done well in absorbing tens of thousands of new units in the last 12 months, markets like Austin, Dallas-Fort Worth and San Antonio have still broken ground on over 3 years worth of unit absorption over the next 18 months.
Other markets, too, have done well absorbing units in the last few years, yet will need to keep up the success to absorb all the new units coming online soon. Miami, for example, absorbed over 3700 units in the last year. However, more than 17,000 units are under construction or in lease-up. Atlanta managed to absorb more than 8000 net rented units since last May, yet 24,000 units are under construction or in lease-up. Raleigh-Durham absorbed more than 2,800 units, but more than 7,000 units are coming online soon or are already leasing. Charlotte also has more than 3 years of absorbed units under construction or leasing.
Other markets, though, still have plenty of capacity to grow. Las Vegas absorbed more than 3600 net units over the last year, yet only 2600 more units are in construction or lease-up. Clearly they are still feeling the burn from the last downturn. Memphis absorbed more than 2000 net rented units and has only 1500 new units coming online. Indianapolis absorbed more than 3000 net units and only 1500 new units are leasing now with only another 500 breaking ground.
While there are still plenty of opportunities for new construction, the low hanging fruit seems to be mostly gone from this multifamily bull market. Some markets are even on the precipice of turning into the dreaded “renter’s market” in the next few quarters.