Permit Volumes Rise in June, Breaking a Three-Month Slide
After three straight months of declines, multifamily permits increased in June, led by a newcomer to the metro-level leaderboard.
According to the U.S. Census Bureau, local governments across the country approved 42,462 multifamily units during June 2017, a 15.1% increase from a year prior. The monthly figure brought the total year-ending June 2017 authorization count to 409,000 units – marking only the second time since November 2016 that apartment authorizations exceeded 400,000 units. That permitting activity represents a 14.6% increase from May 2017’s annual volume and a 2.4% dip from June 2016’s annual total.
Among individual metros, the leaderboard saw a significant reshuffling. Austin rose four spots to #1, dethroning the usual leader, New York. The Texas capital metro permitted more than 2,300 units in June 2017, a 61.9% increase over the same month in 2016. The spike is somewhat surprising, given that market performance has slowed under prolonged periods of elevated supply volumes. Austin has remained a national leader for inventory expansion throughout much of the current cycle.
Chicago also entered the top three in June, registering a 487.5% spike in year-over-year permitting activity. Like Austin, the Windy City metro has experienced elevated supply volumes throughout much of the cycle. That new supply has been heavily concentrated in Chicago’s urban core submarkets, as developers are increasingly receptive to downtown Chicago’s performance potential. Submarket The Loop recently ranked as an urban core outperformer among top development metros.
Meanwhile, the leaderboard’s greatest year-over-year change occurred in Oakland. The metro authorized nearly 1,400 units for the month, compared to just 66 units in June 2016 – a 2,012.1% change. The market’s annual supply levels have trended upward in recent quarters. In 2nd quarter 2017, annual completions reached 2,631 units, the highest 12-month volume since early 2007.
On the annual leaderboard, the top 10 metros remained the same as they did in May, with the first five returning in order. Chicago moved up to #6 from #9, displacing Atlanta, which moved to #8. Austin remained at #7, despite the big bump in June 2017. Phoenix moved down two spots to #10, while Washington, DC improved one spot to #9.
Only three of the top 10 metros issued fewer multifamily permits in the year-ending June 2017 than they did in the preceding 12 months. Dallas and Atlanta each had double-digit declines in multifamily permits (-11.4% and -29.2%, respectively), while Washington, DC declined only moderately (-4.5%).
Despite annual declines in three of the top 10 apartment markets, the annual total of multifamily permits issued in the top 10 metros – 141,907 – was 5.4% greater than the 134,696 issued in the previous 12 months. The total number of permits issued in the top 10 metros was almost equal to the number of permits issued within the metros ranked 11th through 38th. A year ago, permits issued in the top 10 metros almost equaled the 11th through 35th ranked markets.
