Multifamily housing shows resilience

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Although the weak economy has put pressure on the apartment market during the past six months, the outlook for the multifamily industry is still good, ac-cording to the National Association of Home Builders.|ret||ret||tab|

A recent NAHB survey of multifamily builders and property managers across the country found that even amid signs of weakening, such as vacancy rates creeping up and absorption rates drifting down, real rents have remained strong. There is also ready access to capital, as investors seek the stability of real estate during a volatile time on Wall Street. |ret||ret||tab|

An NAHB press release stated that there has been some softening, however, and in certain markets across the country multifamily companies have begun to use rental concessions including free rent specials to drive up demand.|ret||ret||tab|

Multifamily housing production in buildings with five or more apartments declined by a little more than 2 percent to 295,000 units in 2001, with most of the drop in starts occurring in the last two quarters of last year. |ret||ret||tab|

However, multifamily starts rallied in January of this year, with an 8 percent gain to 287,000 units that offset about one-third the ground they lost in the previous month.|ret||ret||tab|

NAHB is forecasting the annual starts rate for buildings with five or more units to hit 300,000 by the end of 2002, a number seen as both healthy and sustainable. The fact that over-building has not oc-curred in most markets also bodes well for the industry. |ret||ret||tab|

NAHB's survey also found that multifamily companies are very concerned about rapidly increasing operating costs, particularly for hazard and general liability insurance. |ret||ret||tab|

Insurance costs, which were already on the rise, have skyrocketed since Sept. 11, increasing as much as 500 percent in some cases. |ret||ret||tab|

Many multifamily owners reported seeing their premiums double, even when accompanied by substantially higher deductibles. [[In-content Ad]]