California Multifamily Construction To Hit 25-Year High
In California, where housing hasn't kept up with the driving demand, multifamily construction is expected to hit a 25-year high in the next three years, according to the latest Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey.
It's the biggest boom anyone in the industry has ever seen, driven by job growth, low interest rates and changing demographics, says Fairfield Residential SVP Brendan Hayes. Click here to see Allen Matkins' multifamily forecast video.
UCLA Anderson Forecast senior economist Jerry Nickelsburg says multifamily has been on fire. That's true almost everywhere in California, he says. Three-fourths of those surveyed began a new project last year, and three-fourths want to start new projects this year.
Rent prices are expected to rise across the state and vacancy rates are expected to tighten in all markets except Los Angeles, where vacancy is expected to rise in the next three years as new apartments come online and ease some of the pent-up demand.
California has underbuilt housing for years, Jerry says. Without enough housing, rental rates have been going up, creating an incentive to bring new projects online.
Capital investment is pouring in from all over the world and permits for development are reaching pre-recession levels, but there is still little risk of being overbuilt, the forecast says.
Allen Matkins' John Tipton says multifamily is like the bond in the portfolio, since people always need a place to live.