DALLAS, TX – The U.S. apartment market is racing toward recovery, rebounding in rents, occupancy and now development.
"The majority of what we're seeing is new development sites. Developers are heavily looking at and investing in new sites," says Mark Humphreys, CEO of the Dallas-based firm. "These are not projects that were shelved during the recession and are restarting."
Humphreys & Partners Architects L.P., with eight U.S. offices, is viewed as a national market indicator because it boasts an apartment development pipeline hovering at about 10% of the U.S. market year after year. Since January, Humphreys' teams have started design plans for development sites on the East Coast, West Coast and points in between, particularly high job-growth areas such as Dallas/Fort Worth and Minneapolis. The current pipeline at Humphreys totals 5,600 units of mostly market-rate urban infill, suburban and student housing, effectively putting the U.S. on track to hit construction starts on 168,000 units on an annualized basis by summer's end. This is all based on Humphreys' being a leading market indicator and producing about 10% of the U.S. apartment market.
As employment numbers improve, Humphreys says there is strong evidence of an "uncoupling" trend by workers who have been living at home or doubling up during the recession. Further strengthening the rental market is a pending recommendation to increase the required down payment to 20% for single-family financing and the continued shake-up in property values. According to a new consumer report, single-family housing prices fell 3.3% in the nation's top 20 cities in a year over year analysis, driving values back to 2003 levels.
"Nobody wants a house now. It's a negative investment," Humphreys says.
Prior to the recession, the U.S. averaged 240,000 unit starts annually. The U.S. logged approximately 65,000 starts in 2009 and 90,000 to 100,000 in 2010. Humphreys' projection of 168,000 starts coming in the near term would return the market to 2008's pre-recession level. The national occupancy rate has climbed to 93.5%, up from the bottom of the cycle at the end of 2009 when it was 91.8%, according to Texas-based M/PF Research. Annual rent turned positive in fall 2010, with the latest reading last month showing a 3.3% increase year over year.
Clearly, it's time to move forward on projects. Emerging as the preferred development leader is market-rate class A. "Statistics and developers are telling us that all the Class A properties are leased up," Humphreys adds.
NOTE TO EDITORS:
Interested parties can request additional information about Humphreys & Partners Architects and its services by contacting the marketing department at marketing@humphreys.com or by visiting the company's website at www.humphreys.com.