Analysts: Rental apartment boom won't go bust

Rental apartment buildings have been sprouting up throughout the region in recent years, and some people in the community are wondering whether there are too many of them for the market to absorb. 

Hoping to get answers to the question, real estate professionals recently gathered in White Plains for a symposium sponsored by the Urban Land Institute Westchester/Fairfield. 

Multi-family development projects have been a favorite among real estate investors and developers in the post-recession era. The cycle of expansion has recently reached its peak nationwide, but considering the strong economy and continuing demand for rental apartments, the decline would be gradual, said Jeanette Rice, who heads multifamily research for CBRE, a major commercial real estate and investment firm.

"Appetite for multi-family continues to be really strong," said Rice, who was among the presenters for the symposium.

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Rice said she does worry about the excess supply of new apartments in certain cities, such as San Antonio and Austin in Texas, where more than 7,000 units — or more than 4 percent of their existing inventory — were added to the market in 2017 alone. 

Some pockets of Manhattan may also have too many new units coming on the market at once, she said, and added: "Don't worry about any part of New York outside of Manhattan. We are not building that much." 

Just shy of 1,000 new apartments were completed and added to the south Westchester market inventory in 2017. The number is expected to jump to about 1,700 in 2018, said Kimberly Byrum, principal of Meyers Research, who also gave a presentation. The 2018 number is twice as much as her estimate of the area's annual absorption, about 850 to 900 units.  

A symposium attendee thought Byrum's estimate of the new apartments coming on the market in 2018 seemed low, remarking that she was aware of developers "worrying that maybe too much coming online already, and they shouldn't be planning projects."

Plans for thousands of newly created apartment units have been proposed or already approved in Westchester communities such as New Rochelle, White Plains, and Yonkers. 

Byrum said she has been in touch with developers and feels comfortable with her estimates. 

"The supply data is based on the research I've done on what's coming on the market, when it will be delivered," she said, adding that she factored in things such as construction delays in her estimates. 

How the influx of new apartments would affect the rents was also a concern. 

Landlords of existing apartments will have to offer concessions to attract tenants to compete against new apartments, Byrum said. But in a bigger picture, the market will do just fine, she said.  

"I think a lot of things you are hearing within the market is just the concern of the current owners in the market whose buildings are 97 percent occupied," Byrum said. "It's (the occupancy rate) going to come down to 93 to 95 percent."

The symposium also included a panel discussion, featuring Greg Belew of Lennar Multifamily Communities as a moderator and New Rochelle Mayor Noam Bramson, Matthew Whalen of Avalon Bay Communities, Melissa Kaplan-Macey of Regional Plan Association, and Randy Salvatore of RMS Companies as panelists. 

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