Axiometrics: Multifamily Starts, Permits Move in Opposite Directions

Multifamily permits issued and starts moved in opposite directions again in January, reported Axiometrics, Dallas.

The Census Bureau reported 446,000 multifamily units permitted for the 12 months ending in January, up more than 23 percent from December and up nearly 5 percent from January 2016’s annualized rate. This represents the fourth time in the past year that annual multifamily permits exceeded 400,000 units.

But multifamily starts fell 7.9 percent from last month to 417,000 units (annualized), Axiometrics said, and the 244,000-unit annual rate for multifamily completions was down nearly 27 percent from December and nearly 30 percent from a year ago.

“Multifamily completions decreased [on an SAAR basis] from January 2016 in all regions, with significant slowing in the northeast and west while the Midwest and South also experienced declines,” Axiometrics said, noting that completions in the northeast and in the west fell more than 60 percent year-over-year.

Axiometrics also analyzed Class A built during the current cycle to see if the rental units being built differs from older properties. “The evidence suggests an ongoing shift away from three-bedroom units to other unit types,” the report said, noting that between 2010 and 2012, three-bedroom units made up nearly 11 percent of all new deliveries, but from 2013 to 2016 less than 8 percent of all new deliveries were three-bedroom units.

“The data shows that much of the decline in the share of three-bedroom deliveries was made up by an increased share of studio and one-bedroom units,” Axiometrics said. From 2010 to 2012, studios made up about 2.6 percent of all deliveries, but that share increased to average 4.5 percent in 2013 and has remained close to that figure.

In addition, one-bedroom deliveries jumped significantly, Axiometrics said. One-bedroom apartments averaged just under 40 percent of all deliveries from 2010 to 2013, but since 2013 that figure has jumped more than 600 basis points to 45.4 percent. Two-bedroom floorplans have also become less common during the current cycle. Between 2010 and 2012 two-bedroom units comprised 47 percent of all new deliveries, but that share fell to less than 43 percent from 2013 to 2016–a 500-plus basis point drop.