Doug Bibby, president of the National Multifamily Housing Council (NMHC), joined REIT.com for a video interview to discuss research on the economic impact of the apartment industry in the United States.
The NMHC published a report this year indicating that the apartment industry contributes $1.3 trillion in economic activity to the U.S. economy every year, which translates into 12 million jobs. That total includes $100 billion in construction spending, $190 billion in operating apartment communities and $1 trillion in resident spending.
Bibby said NMHC members have used the information at zoning hearings and community planning meetings to show local policymakers the kinds of contributions that apartments can make to the surrounding areas.
Regarding the supply of apartment space in the U.S., the industry is “still catching up with demand,” according to Bibby. The number of new apartment unit starts in 2009 fell to 97,000, which represented the lowest level since NMHC began tracking the information in the 1960s. Starts in 2013 totaled 294,000, while the number of apartments completed that year was 186,000.
“Remember that we need between three and four hundred thousand units delivered to the marketplace every year just to keep up with demand,” Bibby said. “So, we’re still lagging behind demand.”
Is the growth in demand for apartment space a short-term trend or a long-term structural change to the industry? Bibby rebuffed the suggestion that it might be a “short-term fad.”
“It is a trend that is underpinned by the millennials coming into the marketplace,” he said. “Downsizing baby boomers are moving into apartments in surprising numbers. And immigrants are still flocking to this country. They rent for at least a decade before moving into the ownership side of the equation.”
Additionally, Bibby noted that downtown markets continue to experience growing interest from renters.
“I think that will continue to drive interest in apartments going forward,” Bibby said.