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How does each market’s supply peak in this cycle compare to its previous peaks over the last 20+ years? Any market on the left of the green dotted line will set a new peak for new supply.

Five groupings:

1) TIER 1: BIG SUPPLY. These are markets adding a ton of supply AND mostly places blistering past their previous peaks: Austin, Raleigh, Salt Lake City, Nashville, Charlotte, Phoenix… And Denver and Jacksonville are pretty close too. These are markets that historically have had little trouble absorbing big supply … and will likely continue to see massive demand … yet will likely get challenged in the short term. They’ll lease up, but slower than most developers want to see.

Among smaller markets? Look at Huntsville… Wow. Other boomtowns include Colorado Springs, Sioux Falls, Port St. Lucie, Lakeland, Fort Myers, Provo, Boise, Asheville, Charleston, Savannah, Myrtle Beach and Pensacola. Great spots long term, but short term could get tough for operators.

2) TIER 2: LOTS OF SUPPLY, BUT NOT CRAZY. They’re new peaks, but a big notch below the first tier — and mostly very large metro areas with growing, well-diversified economies. Supply will have an impact, but these markets probably won’t be the bottom-tier performers. This includes Dallas, Seattle, Atlanta, Tampa, Miami, Orlando.

3) TIER 3: MORE THAN ADVERTISED. We hear about some of these markets as high barrier to entry, and its implied these places aren’t building many apartments. BUT it’s actually a pretty significant volume– especially by local historical standards, even if not among the national leaders, so developers are testing the depth of short-term pent-up demand. This includes Philadelphia, San Jose, Washington DC, Northern New Jersey, Long Island, Boston, Sacramento, San Diego, Los Angeles, Oakland and Minneapolis. In these spots, there are a handful of high-supply submarkets that will be tested.

4) TIER 4: LESS THAN ADVERTISED. Here are some markets aren’t building as many apartments as you might think. The biggest surprise might be Houston. Supply expansion there in this cycle will peak at 3.5%, just a slight tick above its previous peak and below below DFW (5.4%), San Antonio (5.8%) and Austin (11.2%). Yet demand there has been great of late. Also deserving of this group are Chicago, Indianapolis, Columbus, Las Vegas, Kansas City, Portland, Riverside, Anaheim and Greensboro. In most of these spots, supply peaks are fairly manageable and below (or around) previous peaks. These markets are not totally immune to supply impact (and indeed, they’re feeling it already) but could emerge as outperformers in an otherwise down year.

For all 5 Points, CLICK HERE <——

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