While multifamily permit volumes in mid-sized metros shine, decelerating large-metro activity continues to drag national numbers.
In October 2016, total permitting activity fell 14.6% from September 2016 and 2.5% from a year ago, according to preliminary data from the U.S Census Bureau. A total of 35,000 multifamily units were approved for construction by local governments across the country in October, bringing the year-to-date figure to 336,100 units. That year-to-date count reflects a -10.2% change, year-over-year.
In an interesting reversal from September 2016, New York slipped to #7 in the monthly standings, while Dallas/Fort Worth climbed to #1. The reshuffling was further emphasized by isolated year-over-year declines in authorizations. While other leading metros registered positive monthly changes over October 2015, New York and Dallas/Fort Worth saw respective drops of 53.8% and 15.1%.
Major year-over-year increases were experienced in Chicago, Denver and Salt Lake City – the latter of which recorded a spike of 2472.5%. Salt Lake City has noted a steady stream of construction since the recession, which has dampened the market’s rent performances. However, with recent strong Class A rent growth, it wouldn’t be surprising to see construction accelerate. MPF Research data shows, at the end of 3rd quarter 2016, a total of 7,518 units were under construction in Salt Lake City, with more than 5,000 expected to completed within a year. Construction confidence appears partially driven by occupancy rates, which hit an eight-year high of 97.4% in 3rd quarter 2016.
While several markets, including Orlando and Washington, DC, dropped from the monthly list, Seattle upheld the #2 spot. The metro authorized 2,026 units during October 2016, an increase of 141.2% over the same month in 2015. Seattle also preserved its position on the year-to-date chart, settling at #4 with the authorization of more than 12,000 units during the first 10 months of 2016.
Other year-to-date players for October 2016 remained generally unchanged from recent months. New York’s leading status remained intact, though the market took an expected hit on year-over-year measures. The disparity is chiefly a result of developers rushing to obtain permits ahead of tax incentive 421-a’s expiration in June 2015. The artificial inflation is expected to continue to result in large year-over-year declines through the remainder of 2016.
Chicago logged the largest year-over-year increase for year-to-date permits, with a change of nearly 75% for October 2016. Overall performance results remain mixed for the Windy City.
A separate Census report shows a total of 320,700 multifamily units started construction through October 2016. That figure represents a 1.8% drop from the first 10 months of 2015.