A great number of new apartments is set to be available in Brooklyn in 2016.
Axiometrics Multifamily Analyst Nick Fitzpatrick posted on Forbes that "a lot" of apartments are expected to be built next year seeing that 97.% of existing apartments have been resided in October and demands are still currently rising.
An estimated count of 6,073 units will be constructed in Brooklyn next year as of Nov. 16, which is a magnificent boost from the 969 that came in the market this year. New York's King County will likely have the most number of new apartment units set in 2016 among the submarkets in the U.S. Another 2,001 units are scheduled to be delivered in the market in 2017.
Based on October apartment data, renters are able to pay the submarket's average effective rent of $3,823 due to the well-paying jobs made available by the Brooklyn Tech Triangle. Hence, more developers are now investing in Brooklyn.
The average effective rent in Brooklyn in October was 4.8 percent higher than the October average last year. Rental revenue impact was also 5.4 percent higher compared to the prior year.
The rise of Brooklyn's apartment construction contributes the largest part of the apartment surge in New York area, wherein 24,575 new apartments are expected to come to the market in 2016. The metropolitan division including Jersey City and White Plains is expected to receive most of the new apartments next year. It surpasses Houston and Dallas that had the top spot since the year 2013, according to Forbes.
There were 4,717 units delivered in the Atlanta/Fulton submarket including the Downtown, Midtown and Buckhead neighborhoods in 2015, and additional 5,606 units will be available next year. However, there's a reported decrease of both annual effective-rent-growth and occupancy rates since 2014.
New stock continues to arrive in Houston's urban-core Montrose/River Oaks submarket despite the negative effective-rent-growth and the decrease in October occupancy. From 2013 to 2015, 11,280 units have been built and 4,820 identified units are expected to arrive in 2016 as of Nov. 16. Also, 3,277 were identified to be delivered for 2017.
"Most people think that the tumbling oil prices and resultant job loss is the primary reason for Houston's apartment market weakening this year, but all the new construction in the urban core contributes as much, if not more," said KC Sanjay, a senior real estate economist at Axiometrics.
An identified supply of 3,999 units is already earmarked for delivery in 2017, on top of the 3,393 new units in 2016 at Seattle's Downtown/ Capitol Hill/ Queen Anne. The new amount of supply has affected the performance of existing properties. Data shows that Atlanta/Fulton has a large decrease in annual effective rent growth in 2015, from 8.0 percent in October 2014 to 2.8 percent in October 2015.
Montrose/River Oaks had 0.4 percent rent growth compared to 0.1 percent in October 2015 and occupancy declined from 94.4 percent to 93.9 percent. Denver Downtown submarket was down in October, with 0.9 percent from 5.4 percent a year ago.
In the northwest, rent-growth rates increased in over the past year; Dallas' Oaklawn submarket recorded 2.0 percent annual effective rent growth in October 2015 compared to last year's 0.5 percent having delivered 2,339 percent units. There is also an increase of 95.1 percent occupancy in October compared to 94.8 percent of the same month last year.
Downtown/Capitol Hill/Queen Anne in Seattle had an increase in rent rate of 3.5 percent from 2.9 percent in the past year. Meanwhile, occupancy dropped from 95.5 percent to 94.7 percent.
