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Class A Multifamily: Construction Wave Ebbing

David Bitner • 12/20/2019
Cushman & Wakefield's Multifamily spotlight explores the future of this sector and features key highlights. 
Multifamily construction activity this business cycle has consistently exceeded that of the previous decade, driven by Class A development, which accounted for more than 68% of annual deliveries in the peak construction years of 2015-2018. And just 10 markets captured 82% of the deliveries.

Key highlights include:
  • The construction wave was a response to robust rent and occupancy trends supported by renter household growth, particularly affluent households.
  • Construction has peaked. Class A deliveries have declined precipitously, down 22% Q3 2017 - Q3 2019, contributing to multifamily pipeline waning.
  • Construction will continue to soften and remain constrained due to rising construction costs, land scarcity in key pipeline markets, moderating rent growth and slower capital appreciation among multifamily assets.
  • Cushman & Wakefield foresees a refocusing on workforce housing in the near term given the slower construction environment.

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