National Housing Market Outlook

New Report: Burns Apartment Developer and Investor Survey

Steve Basham

Steve Basham

November 10, 2023
Holiday apartment house

Apartment developers expect the pipeline to slow dramatically in the next year.

John Burns Research and Consulting is thrilled to launch our premiere Apartment Developer and Investor Survey. With this survey, we aim to cast light on areas of the apartment market where the industry has lacked clarity, including the long-term development pipeline, access to capital, and lease-up challenges.

If you or your company are involved in the development, investment, or management of apartment communities, your insights are vital to our research. Please fill out this form to participate.

We surveyed 56 developers, investors, and operators with a collective portfolio of 241,850 units in September and October and confirmed:

  • Post-Covid construction has peaked, and developers expect starts to slow at least -20%, with 25% of participants believing apartment starts will slow at least -50%.
  • High interest rates and cautious lenders have sidelined investors.
  • Leasing has slowed in part due to rent hikes.
  • Thoughtful project design and competitive amenities drive demand.

Post-Covid construction has peaked, and developers expect starts to slow significantly.

  • A wave of under-construction apartments will finish in 2024 and into 2025.
    • 40% of the surveyed developers have 500+ units under construction.
  • Future apartment starts will slow dramatically, with the pipeline shrinking significantly once the current round of development is delivered.
  • Almost all respondents say securing development financing is becoming more difficult.

High interest rates and cautious lenders have sidelined investors.

Very few apartment deals are taking place, and that won’t change anytime soon.

  • Transactions and deals have stalled, with only 16% of respondents selling an apartment property in the last six months. No one reported any acquisitions over the same period.
  • Financing for apartment acquisitions has dried up as interest rates climb and apartment fundamentals soften due to rising supply.
  • About 70% of respondents say they are not planning any new purchases in the next six months.

Pricing sentiment is mixed.

  • There was little consensus in our survey of current pricing levels. 
  • A minority think assets in their market are undervalued, while the rest are evenly divided between seeing assets as overvalued or priced fairly.
  • The range of opinions reflects the ongoing disconnect between buyers and sellers. Investors report that the bid-ask spread remains the defining characteristic of the current apartment market. 

Healthy lease-up at newly opened communities.

  • Three-quarters of respondents are averaging double-digit leases monthly at unstabilized communities (new communities still in lease-up).

Affordability is a significant factor in retaining tenants.

  • Commonly cited reasons for non-renewal of leases include moving into a less-expensive apartment and moving in with roommates.

Developers underscore the importance of thoughtful project design and competitive amenities.

  • Many agree that a newly opened community must have high-quality amenities in line with or superior to the competition.
  • Some are shifting their focus from physical amenities (e.g., pool, BBQ, parks) to service-oriented amenities, including concierge services. 

We have gleaned these essential insights from our inaugural Apartment Developer and Investor Survey, which captures both current sentiment and insight into future conditions/supply.

If you’re a stakeholder in the apartment sector, we invite you to take part in our upcoming quarterly surveys.

For participating, you’ll receive the survey results and high-level proprietary JBREC analysis. Join us in refining the industry’s market understanding, and gain valuable data to guide your next venture. 

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About The Author

Steve Basham
Steve Basham
Research Manager, Rental Surveys
Steve leverages 15+ years of real estate experience to deliver insightful, timely analysis and recommendations for JBREC’s clients.

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Products and Services Mentioned

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Apartment Developer and Investor Survey

Our quarterly survey that illuminates parts of the apartment market where clarity has traditionally been hard to find.
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Rental Communities Package

A complete look into the multifamily sector, including apartments and dedicated build-to-rent communities. A deep dive into the sector’s major markets, including forecasts, rental market ratings, key fundamentals, economic drivers, demographics, and the impact of alternative housing sectors.
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Rental Communities Analysis and Forecast

Every quarter, we provide a detailed look into the US apartment and build-to-rent industries, relevant macro drivers, outperforming/underperforming markets, for-sale housing market impact on rentals, and public-operator metrics.

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