After at least three years of unprecedented growth, the number of newly-built apartment units is expected to slightly decrease next year according to a major banking and investment company.
The San Francisco-based Wells Fargo Securities is reporting in its Apartment Market Outlook that the demand for new rentals has “softened somewhat compared to the fairly robust pace hit last year, and net completions have slowed to their slowest pace since 2016.”
While the accelerated demand of recent years for new apartment space may be prove slightly off next year, the report nevertheless expects there to be a steady demand for apartments among those in both the 35 to 44 years of age category and the Baby Boomer generation.
That slight market shift is noticeably different from the demand for apartment space among college-age students that has fueled the market in the last several years.
Overall, the Wells Fargo report is forecasting a marginal 0.2 percent decline in apartment demand next year, compared to the 1.8 percent increase seen this year.
“Even as apartment construction downshifts,” says the report, “there is still a significant number of units in the pipelines, and we expect activity to remain elevated.”
In fact, there should be around 380,000 new units built next year.
Of the thirteen cities listed by Wells Fargo as having the largest number of apartments under construction, three were in the West, with Salt Lake City leading the way.
By Garry Boulard
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