New apartments are flexing its muscle once again in 2022, despite pressing economic concerns and supply chain disruptions in the aftermath of the pandemic.
WRITTEN BY VERONICA GRECU | RENT CAFE | AUGUST 23, 2022
With no less than 420,000 new rentals expected to be built this year, U.S. construction activity is at a historic 50-year high, according to RentCafe’s annual apartment construction report. A little over 30,000 of these new apartments — making up about 7% of the total development pipeline — are projected to open in California alone.
Despite the fact that Greater Los Angeles secured a spot in our top metros with the most projected apartments in 2022, the metro just hit a five-year low in terms of apartment construction. What’s more, the Bay Area and Sacramento are also seeing drops in new deliveries compared to last year, while San Diego is keeping a steady pace of construction.
Here are more details about the apartment construction in the Golden State this year:
- Greater L.A: With 11,536 new units expected to be delivered this year, apartment construction predictions in the Los Angeles metro dropped 22% Y-o-Y. What’s more, the supply of new apartments is projected to hit a five-year low in 2022.
- The city of Los Angeles accounts for most of the projected apartments — approximately 6,500 — and one-third of those have already been delivered this year.
- The San Diego metropolitan area is keeping a steady pace of construction, with nearly 4,000 new apartments set to come online this year, almost on par with the volume of deliveries for each the previous five years.
- A little over 3,400 units will be delivered in the city of San Diego alone, a welcomed addition to this tight rental market where the occupancy rate is at a high 97%.
- The San Francisco metro area is expecting 7,400 new units this year, with 1,175 apartments emerging in The Fog City alone. Compared to the numbers of 2021, that’s a 26% drop in apartment construction.
- The San Jose metro accounts for a little over 3,000 new apartments set to come online by the end of the year. That’s half of the number of units completed in 2021, closer to the levels of construction during the pandemic.
- Long gone are the days of heavy apartment construction in Sacramento metro: the area will see as little as 750 new apartments by the end of 2022, which is a 63% Y-o-Y drop in construction activity and the lowest in 5 years.
“The construction industry […] is still being hampered by three familiar challenges: labor shortages; material costs and availability; and supply chain issues,” said Doug Ressler, manager of business intelligence at Yardi Matrix.
You can find the report as well as more details at a market level by accessing this link: https://www.rentcafe.com/blog/rental-market/market-snapshots/apartment-construction-2022/
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