From DJC Reports
2013 is shaping up to be a banner year for apartment construction.
According to an analysis by HFO Investment Real Estate, construction permits for multifamily projects in the Portland-metro area are on track to reach their highest total in more than 15 years. HFO reported that permits were granted for 3,854 units through July 31. At that pace, the total for 2013 could top 6,600 – the most since 1997, when there were 7,200.
HFO Partner Greg Frick said that room exists for more multifamily construction. Last year, in the city of Portland, 1,612 permits were issued for apartments, according to the most recent quarterly report from Portland State University’s Center for Real Estate. This year, by May, 1,119 were issued.
Last year’s numbers were about even with 2004, but they were just a fraction of the permitting activity between 2005 and 2008.
Frick said one reason for the pickup this year is that some developers who were burned during the recession needed time to regain their financial footing. Now, with new equity in hand, cap rates at low levels, and interest rates potentially on the rise, developers are rushing to start their projects.
And young people in particular – are choosing to rent rather than purchase homes.
“There is a segment (of the population) now where the idea of the American dream is not homeownership,” said Frick. “I think it’s flexibility.”
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