Housing production is on the upswing in the United States and in many markets it is being driven by an increase in multi-family unit production that will make MSA’s more urban. For the U.S., seasonally adjusted multi-family housing starts are up 63% YOY to an annualized 225,000 units and a new wave of permit issuance driven by strong apartment market fundamentals will add more than 1 million new apartment units to cities through 2015.
Thus far this year, there are 14 large MSA’s where multi-family unit permits exceed single-family unit permits:
- New York City
- Los Angeles
- West Palm Beach
- Columbus OH
- Orange County
- San Diego
- San Jose
- Fort Lauderdale
What is significant is that the increased production of urban housing (typically at densities in excess of 30 units per acre) is taking place not just in markets with an established trend for higher-density housing (New York, Boston, Miami, Seattle, Chicago), but is also taking place in MSA’s where the majority of new housing production in recent decades has been single-family. There are more apartment units being permitted this year than detached units in places like Los Angeles, Orange County, San Diego, San Jose, Austin and Durham. For this new wave of development, renters, apartment developers (and those financing new units), have focused on the best locations for new developments that combine live, work and play, and in many markets, that is transforming the suburbs.
To pick a market that is undergoing a transition to urban densities, consider Orange County, the place that has epitomized development of low-density, suburban master-planned communities since the 1960s. An improved economy, dwindling availability of detached land and continued high cost of ownership housing has resulted in the next iteration of planned community, the rental master plan. The Irvine Company introduced the 1,677-unit Village of Cypress in early 2012 in a location central to jobs and shopping, with four distinct rental products built around a common recreational facility and pool. The Irvine Company is building upon the success at Village and The Park at The Irvine Spectrum, which are complete masterplan rental communities with great amenities and even an urban core with a grocery store, Starbucks, dry cleaners and other convenient retail.