Apt. Construction Booms in Downtown Submarkets

hamilton-zanze June 22, 2016

Tens of thousands of new apartments are now opening in central business districts (CBDs) nationwide, reports National Real Estate Investor.

The number of apartments in downtown submarkets is growing at a rate of 5% annually, on average. “That’s a huge number — particularly given that downtown areas are, by definition, smaller and more confined areas,” says Jay Parsons, vice president for apartment market intelligence firm MPF Research. “That means you have new apartments within walking distance of a ton more new apartments.”

According to data firm Reis Inc., the percentage of vacant apartments in downtown submarkets averaged 6.3% in the Q1 2016, up from 5.6% last year.

By comparison, the number of apartments in suburban markets is increasing by less than 2% annually and is expected stay under 2% for the foreseeable future, according to MPF Research.The percentage of vacant apartments in suburban areas averaged 4.2 % in Q1, up from 4% last year.