Self Storage Supply Expected to Plunge
The self-storage industry is experiencing a significant slowdown in construction activity, with a sharp decline expected by the end of the decade due to a surge in abandoned properties and deferred projects. Despite an initial increase in rentable supply forecasted for the first quarter of 2024, Yardi Matrix predicts a substantial drop in new net rentable square feet by 2026 and 2028, signaling a maturing market. Factors such as heightened construction costs and a saturation of supply are contributing to this shift, prompting a reevaluation of long-term development interest in the sector.
America’s Apartment Buildings are Getting Bigger & Taller
A surge in new rental apartments, driven by larger developments, is reshaping the housing market, with the most significant increase since the 1980s. Developers are capitalizing on relaxed zoning laws and investor interest in smaller cities, leading to a rise in towering apartment complexes, including some of the tallest buildings in decades. Rising construction costs and land scarcity are pushing developers to build upward, with high demand for rentals fueled by factors like record home prices and changing attitudes toward homeownership.
Why the Central Business District May Become a Thing of the Past
Downtowns across the United States are undergoing a reevaluation of terminology and strategy as they adapt to changes brought about by the pandemic, with a shift away from traditional labels like “central business district” to embrace a more diverse and active urban landscape. Stakeholder groups are focusing on fostering a vibrant mix of small businesses, placemaking initiatives, and events to attract foot traffic and revitalize city centers, while also addressing regulatory hurdles that hinder development and business growth. As cities navigate the evolving needs of downtown areas, strategies such as supporting small businesses, enhancing transit options, and streamlining regulatory processes are becoming increasingly important for fostering economic recovery and long-term sustainability.
With Billions Invested, Build-To-Rent Brings Changes to Apartment Industry
A growing interest in built-to-rent single-family housing is reshaping the real estate market, attracting significant investment and prompting shifts in industry practices. With high mortgage rates and limited housing inventory, built-to-rent properties offer attractive returns and faster construction timelines, driving their popularity among developers and lenders. Despite initial skepticism, the model has proven successful, with high occupancy rates and premium rents compared to traditional multifamily units, leading to widespread adoption across the industry.
U.S. Multifamily Construction Starts to Decline in 2024
Multifamily construction is projected to decline by 20% in 2024 due to tight lending conditions, high development loan costs, and a shortage of skilled labor, with multifamily starts totaling 472,000 units in 2023, down 14% from the previous year. Conversely, the residential remodeling sector is expected to hold steady this year, supported by factors such as low housing inventory, aging housing stock, and homeowners’ growing equity, although growth is forecasted to be nominal at 2% in 2025. Labor shortages and material/product shortages remain challenges for both the remodeling and overall housing market, with efforts to attract skilled labor and address supply chain disruptions ongoing.
