In an Axiometrics piece out today “Multifamily Completions Will Continue to Rise” they had a chart showing apartment building completions versus starts lagged 1 year:
Why lagged 1 year? Because “the Census Bureau’s average length of time from start to completion for projects with 20 or more units was 11.9 months in 2013 and has averaged 12.8 months since 1999″. The chart bears that out with a couple exceptions, the first in the 2004 – 2005 period where hi-rise condo construction was peaking; high-rise projects can take two plus years to complete. More recently with the boom in urban apartment construction starting in 2o13 completions started to stretch out as “the increase in high-rise and mid-rise, pedestal-style apartment projects, which include underground or structured parking facilities, has increased the time from start to completion”.
But note how that trend has reversed beginning earlier this year which brings us to the key takeaway: “The two data series have come back together in the past few months as MF development is starting to shift away from urban submarkets and back toward suburban or outer urban submarkets.”
While suburban apartment building investors have faced little new competition since the financial collapse, that is beginning to change as deep pocketed institutions and their developers are looking for new places to put their money to work.