With homeownership's popularity waning, the postrecession rental market has expanded
Los Angeles, CA (PRWEB) December 06, 2013
The Apartment and Condominium Construction industry has experienced one of the fastest recoveries within residential construction industries. According to IBISWorld Industry Analyst Omar Khedr, “Decreased vacancy rates and lower rent prices have facilitated growth in multifamily complex starts.” In addition, declining homeownership rates, aggressive lending into the multifamily sector and an improvement in employment and disposable income have all boosted demand for apartments and condominiums. Despite a steep drop in 2008 and 2009, industry revenue is expected to grow at an average annual rate of 6.9% in the five years to 2013.
Starting in 2010, the industry experienced a sharp increase in demand for multifamily homes, emerging as one of the fastest-growing real estate segments in the five years to 2013. A number of factors led to this increase in demand; for example, given the slow economic recovery many potential home-owners have chosen to rent apartments instead of buying a house. This trend was reinforced by limited access to credit and a recessionary mindset among individuals. In addition, the increasing number of young professionals lowered the vacancy rates in major metropolitan areas, stimulating demand for new projects during this period. As a result, IBISWorld expects revenue to jump 8.4% to $47.3 billion in 2013.
In the five years to 2018, the current growth trend the industry has experienced is expected to slow down. “Industry revenue is anticipated to increase during this period,” says Khedr. Although revenue will grow at a slower rate due to a surplus of projects in key markets, continued migration of the US population toward metropolitan areas will still generate strong demand for industry services.
This industry is characterized by its many small to medium-size contractors that operate in relatively narrow regional markets. The four largest players currently generate less than 10.0% of industry revenue, but many participants operate on a national basis and within other industries, including single-family housing construction, nonresidential building and property development, to lower income fluctuations and decrease downturn risks. The demand for property construction generally fluctuates with economic cycles, but individual market conditions are also important as the residential sector may expand, while the commercial sector is declining, or vice versa. Firms are also offering services across several states or metropolitan areas in an attempt to lower downturn risks associated with local markets.
For more information, visit IBISWorld’s Apartment and Condominium Construction in the US industry report page.
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IBISWorld industry Report Key Topics
The Apartment and Condominium Construction industry is composed of general contractors responsible for constructing new multifamily residential units, including high-rise apartments, townhouses, condominiums and medium-to-high density units (i.e. units not separated by a ground-to-roof wall). All of the complexes may be constructed for sale as condominiums or cooperatives, or used as rental apartments. This industry does not include speculative builders or contractors who build on their own account for sale.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.