Up. Down. Up. Down. In the past, tracking multifamily building activity often felt like watching a statistical roller coaster. But the steep highs and deep plunges of the past have smoothed out considerably, as the relatively steady yearly starts numbers show.

“The stereotype [associated with the industry] in the 1980s was doctors and dentists getting into apartments for the tax breaks,” remembers Mark Obrinsky, chief economist for the National Multi Housing Council. He says the volatile patterns of the past were often encouraged by governmental decisions such as urban renewal or tax code changes. “By the mid-1990s, you're now talking about a different type of industry,” he says, with more professional management, better data, and more sophisticated decision-making.

“There's greater transparency now,” says Obrinsky, referring to both public and private data. “Everyone is more aware of what everyone else is doing. That helps avoid overbuilding. It doesn't eliminate it, but it gets pulled back more quickly.”

As a result, apartment building has stabilized, with the industry completing roughly 285,000 multifamily units annually, according to the U.S. Census (which includes condos in that figure). It has come as a surprise to many, but Obrinsky believes the levels are just about right. “Steady growth over the long run is not such a bad problem to have,” he says. “A volatile building cycle is much more costly.”

ISO SPEED AND EFFICIENCY Multifamily building activity may have smoothed out, but apartment and condo firms still feel the pressure to produce. “The biggest change has been how fast we're building and what it's costing,” says Stuart Meyers, chairman of The Cornerstone Group in Coral Gables, Fla., which now starts around 3,000 units annually, a significant increase from the 1,500 to 1,800 units of the past. To keep up, the company has used more form construction and is constantly searching for more efficient building materials and techniques. It's already seen a difference. “A 300-unit product used to take us 15 months to complete,” Meyers says. “Now it takes a year or less. We've shaved three or four months off the construction time.”

Sources: U.S. Census Bureau, Freddie Mac

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