One recurring question we get these days is whether or not apartment developers are “over building”, and of course the answer really can depend on many variables – the market or sub-market being assessed, current vacancy rates in those markets, market rents, etc. As a result our answer to the question is usually, “Well, it depends…” followed by all kinds of references to all of the criteria mentioned in the prior sentence. Still, it’s often useful to look at data to get a feel for how things look presently as compared to previous years.
Today we took a look at the apartment building permits issued in North Carolina in the first four months each year (January – April) from 2004 to 2012, and this is what we found:
2004 – 330 permits
2005 – 274 permits
2006 – 305 permits
2007 – 228 permits
2008 – 230 permits
2009 – 152 permits
2010 – 96 permits
2011 – 158 permits
2012 – 184 permits
As you can see the number of permits issued has almost doubled in 2012 from the same point in 2010, but you have to keep in mind that 2010 was an exceptionally low year. From the US Census’ 2011 Survey of Market Absorption of Apartments:
In 2010, there were approximately 89,100 privately financed, nonsubsidized, unfurnished, rental apartments in buildings of five units or more completed in permit-issuing areas in the United States. This is the lowest number reported since 1993 (77,200 units).
Obviously construction permits are up, and each market and sub-market will have its own vagaries, but for the most part the pace of apartment construction in North Carolina has a ways to go before it reaches the boom levels of 2004 or 2006.