Something we have frequently chronicled on this blog is the strong demand for new housing across the US. While this has fueled the construction of single-family housing, the fact remains that the shortage of available – and affordable – housing has in turn led to calls for an increase in the construction of multifamily housing units (e.g., apartments and condominiums). Apartments and condominiums do have some advantages over single-family homes, key among them affordability – rent is often less costly than a mortgage payment in many markets – and the generally larger number of living units that can be included in a multifamily housing complex.
Thus, a recent article describing increasing construction of larger apartments shows that the COVID-19 pandemic is affecting this segment of the housing market as much as it is single-family housing. For many renters, larger apartments are a necessity. With hybrid work arrangements increasing becoming common, tenants need designated spaces for home offices – no matter how cozy they may seem. Furthermore, with many people adjusting their lifestyles in the pandemic – and remaining in their apartments more – even modest increases in living space can be seen as an attractive feature to potential tenants.
However, this trend of larger-sized apartments does have some potential downsides:
- Increases in the size of an apartment means that fewer units will be constructed, at a time when more residences of every type are needed in the US.
- Similarly, larger-sized will generally command higher rents, potentially pricing out lower-income tenants and those who suffered financial reverses during the COVID-19 pandemic.
- The mix of building materials needed to construct these larger apartments will also change – more drywall and interior supports will be needed to create these additional rooms, while more flooring, paint, and interior molding will needed to finish these units.
For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Construction and Building Products and Consumer Goods areas. Freedonia Custom Research is also available for questions requiring tailored market intelligence.