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WSJ: Luxury Apartment Boom May Fizzle in New Year

WSJ: Luxury Apartment Boom May Fizzle in New Year

 (Dreamstime)

By    |   Tuesday, 03 January 2017 12:48 PM

Upscale properties are losing their pricing power after seven years of big rent hikes as the supply of apartments outpaces demand, according to a report in The Wall Street Journal.

“More than 50,000 new units were rented by tenants in the fourth quarter in the U.S., six times the number in the year-earlier period,” the newspaper reports, citing data from MPF Research. “But that demand was overwhelmed by the 88,000 new units that were completed in the quarter, the most since the mid-1980s.”

The glut in luxury apartments means developers in New York are offering several months of free rent on some projects, while landlords in Los Angeles are offering free parking to entice would-be tenants. Rents rose 3.8 percent in 2016, compared with the 5.6 percent hike of the prior year.

And the supply of luxury rentals will only grow in 2017.

“More than 378,000 new apartments are expected to be completed across the country this year, almost 35 percent more than the 20-year average,” the WSJ reports, citing data compiled by Axiometrics Inc. “Most of the new construction in recent years has been on the high end.”

About 30,000 new apartments will flood the New York market this year, with 85 percent of those in the highest price range. Dallas will have 25,000 new apartments in 2017, compared with the long-term average of roughly 9,000 new apartments a year, according to Axiometrics. Los Angeles is expected to get roughly 13,000 new apartments, nearly double the historical average.

“This is going to be one of the best apartment markets that I’ve seen [for renters] since 2011,” Ric Campo, chief executive of Camden Property Trust, one of the country’s largest apartment owners, told the WSJ. “The consumer is going to have much broader choice at a lower price.”

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Upscale properties are losing their pricing power after seven years of big rent hikes as the supply of apartments outpaces demand, according to a report in The Wall Street Journal.
housing, apartment, rent, luxury
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2017-48-03
Tuesday, 03 January 2017 12:48 PM
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