Top Markets for Quarterly Completions in 3Q 2017

Apartment completion volumes remain at peak levels across the U.S. apartment market, with a large number of new units delivered in 3rd quarter 2017, specifically. At a metro level, 91 of the nation’s 100 largest markets received at least some new apartments in the past three months. Thirty-three of them saw quarterly completion volumes of more than 1,000 units. The 10 receiving the largest number of new units have been development leaders throughout much of the current cycle.

New York expectedly led for metro-level completions. In 3rd quarter 2017, new supply in the Big Apple hit 6,760 units – a volume the city should be able to work through fairly quickly. Though occupancy dipped 0.3 quarter-over-quarter, the market remains very tight at 97.8%.

Houston, the national leader for completions in 2016, ranked #2 for completions in 3rd quarter 2017. The 5,846 units completed in the past three months sat below the 7,018 figure registered in the same quarter of 2016. However, the current number compares to the roughly 10,000 units that, pre-Hurricane Harvey, had been scheduled to complete in 3rd quarter 2016. Despite the Harvey-related delays, the current completion volume exceeded the elevated average of 4,957 units over the past three years. The Downtown/Montrose/River Oaks submarket accounted for more than 20% of the metro’s quarterly supply. The Braeswood Place/Astrodome/South Union, Katy and Spring/Tomball submarkets also experienced notable deliveries. However, those areas were among the most affected by flooding from Hurricane Harvey in late August.

New units are leasing up well in Houston. The market saw lease-up velocity in September jump to the highest level since mid-2015.

Leaders for Apartment Completions in 3Q 2017

Trailing Houston, Dallas received 5,632 units in 3rd quarter 2017. With strong supporting fundamentals, the North Texas metro has seen robust development activity throughout much of the cycle. Dallas has received more than 5,500 units in each of the past three quarters. More than 36,000 units under construction – the largest in-progress volume in the nation – are set to expand Dallas inventory by 6.5%. Many of the new units this cycle have come to Dallas’ urban core and northern suburbs, which boast employment clusters and a favorable demographic profile.

To the west, Seattle landed at #4 on the quarterly completion list, receiving 5,115 units from July through September. Seattle has seen elevated supply over much of the past four years, with developers lured by the Emerald City metro’s strong economic growth, favorable demographics and vibrant urban core.

Southern metros Nashville, Atlanta and Austin occupy the next three spots in the top 10 list, each with quarterly completion volumes of roughly 4,300 to 4,600 units. In Nashville and Atlanta, development activity during the cycle has been concentrated in the urban core and a few high-end suburbs. In contrast, completions in Austin have been fairly widespread, geographically.

A similar development pattern – completions concentrated in the urban core and upscale suburbs – is seen in #9 Denver/Boulder and #10 Los Angeles. In the #7 metro, Chicago, development is almost strictly limited to luxury product in the urban core.