“It would surprise me if it continued to outperform by so much, but the fundamentals are still in place for a very good ride,” he says. “Vacancy rates will continue to go down, rental rates will improve. And as the economy improves, interest rates will rise, so people who might want to buy won’t be able to and will continue to rent.” –Kate Herman
Busy Builders
The condo craze pushes permits and starts upward.
Just a glance at Marcus & Millichap’s supply index for the second quarter is all it takes to see a steady upturn in multifamily building permits, with starts lagging predictably. The second quarter’s index registered 109.48, building on three prior quarters of increasing construction activity. (The index tracks the number of multifamily permits–apartments, townhouses, and condos–against multifamily starts, as measured by the Census Bureau, Economy.com, and others.)
“Multifamily permits are up, but those are heavily skewed toward condos. They’re so hot right now,” explains James Holt, national client services manager for Marcus & Millichap.
Yet the upswing in permits and starts is being spurred by factors others than condo mania. “We are building at least two projects for August 2006 delivery,” says Joe Coyle, president of GMH Communities Trust’s student housing division, College Park Communities. The group broke ground in August for the Orchard Trails Apartments, a 144-unit student housing community near the University of Maine at Orono.
In September, GMH also began construction on another development of the same size: The Enclave II, near Ohio’s Bowling Green State University.
–Amy Rogers Nazarov