Bloomberg’s Prashant Gopal takes a look at the slowing pipeline of newly built communities, as an increasing amount of developers, wary of overbuilding, put their current plans on hold.
As rent growth begins to trail off in some of the nation’s largest markets—and particularly in the Class A sector—some private companies, such as Pollack Shores Real Estate Group, are hitting the pause button. But the slowdown has affected the REIT sector, too, as apartment REITs have become the worst-performing asset class in commercial real estate this year.
About 30 percent of the apartment units under construction are in cities, compared with 15 percent in the previous decade, according to multifamily-data firm MPF Research.
“Everybody fell in love with these markets and wanted to build—but you can’t build forever, it doesn’t work that way,” said Ryan Severino, chief economist at research firm Reis Inc. “The apartment market is losing steam.”
The second quarter was the fifth straight in which construction exceeded net gains in occupancy, according to a report Reis issued late [last] Tuesday.