New apartment construction in the U.S. is flexing its muscle once again in 2022, despite pressing economic concerns and supply chain disruptions in the aftermath of the pandemic. And with 420,000 new rental units projected to be completed this year, multifamily construction is at a historic, 50-year peak. And with 15,988 projected new apartments in the pipeline, Metro Phoenix ranks No. 6 in the country for new apartment construction.
This Metro Phoenix apartment construction boom is mirrored by pent-up demand for apartments nationwide, especially as some renters postpone their dream to become homeowners amid soaring inflation and rising interest rates.
By and large, apartment developers have picked up the pace in both 2021 and 2022, almost unexpectedly exceeding even the most optimistic projections for the post-pandemic multifamily landscape.
“The construction industry is finally returning to pre-pandemic levels of activity but is still being hampered by three familiar challenges: labor shortages; material costs and availability; and supply chain issues,” said Doug Ressler, manager of business intelligence at Yardi Matrix.
Surprisingly enough, the New York metro is projected to deliver the most apartments in 2022, exceeding Dallas-Fort Worth from the top position for the first time since 2018. What's more, developers in half of the top 20 metros have embarked on a veritable apartment building spree and are projected to hit their five-year highs this year.
Interestingly, there's one big reason why so many metros are set to break their records from the last five years: As Ressler explained, "people who lived with family or friends during the pandemic formed independent households as employment and savings surged."
Looking at the city-level data, Houston is the absolute leader as far as the number of apartments opened in the first half of the year. Hot on the heels of Space City is another construction-crazed Texas location, Austin, followed at a greater distance by Seattle, WA.
New York metro firing on all cylinders as Dallas-Fort Worth deliveries slow down after a 4-year streak
Despite slight setbacks in previous years (mostly due to pandemic-induced hurdles), New York is back on its feet again — and with a bang: A record 28,153 brand new rental apartments are expected to be finished here before the end of the year, which is almost 50% higher than the number of apartments that were completed throughout the metro in 2021.
That’s a remarkable comeback for a metro that has been bleeding residents as a direct consequence of the pandemic and subsequent restrictions. For example, in 2021, New York’s population decreased by 1.6%. That translates into roughly 328,000 people, according to U.S. Census data.
At the same time, Dallas-Fort Worth metroplex developers are more cautious when it comes to multifamily construction, even as the metro has continued to see some of the largest population increases in the country. The former torchbearer of apartment deliveries is set to add 23,571 new units this year, which is approximately 10% less than its 2021 levels.
Perhaps the most surprising performance in terms of multifamily building this year comes from the Miami metro — the nation’s hottest apartment market. This metro climbed an impressive six positions from 2021 to secure the third spot in our current ranking. That’s a well-deserved comeback for Miami, which used to be one of the busiest apartment builders prior to the pandemic.
Other metros that caught our attention this year were Nashville, TN; Chicago; and Portland, OR — all of which were new entries on our list. Of the three newcomers, the most new apartments are expected to open in Nashville (9,620). Renters in Chicagoland will benefit from 8,573 new apartments by the end of this year, while 8,476 new rentals are expected to open their doors in the Portland metro area.
Meanwhile, compared to 2021 levels, the Boston; San Jose, CA; and Kansas City, MO, metro areas are taking things easy construction-wise — so much so that they've been knocked out from our top 20 this year.
Metro Phoenix apartment construction set to reach 5-year peak
In response to outstanding demand for rentals, 10 of the top 20 metros for apartment construction are on track to hit record highs in 2022 compared to their total deliveries in each of the last five years.
The leader of the pack is the New York metro, which has been dealing with a serious lack of available units for several years now. Here, a combination of rising interest rates, lack of available units and growing need for more living space have many would-be homebuyers continuing to rent. As a consequence, New York developers have upped their game and the metro is on track to see the highest number of units delivered in the last five years.
The next record-breaker is Miami, where the existing supply of rentals simply can't keep up with sky-high demand. Here, too, developers have plunged into a building frenzy that’s set to culminate in record-breaking numbers in 2022 compared to the area's completions in the last few years.
Similarly, the Austin, TX, metro area is pushing hard to bring an estimated 18,288 new units — the highest number of completions the metro has seen in the past five years — to the market before the end of 2022. What’s more, Austin managed to climb three positions this year to squeeze by Houston (another heavy builder in Texas) and land in fourth place in our ranking.
Other metros that are set to break their five-year records in 2022 are Phoenix apartment construction; Seattle; Orlando, FL; Nashville, TN; Raleigh, NC; Portland, OR; and Tampa, FL. Each of these is expected to add between 6,000 and 16,000 new apartments by the end of this year.