Multifamily Pipeline Slowdown?
Tower cranes over the District of Columbia
Source: Ted Eytan via wikimedia
Results of a survey from the National Multifamily Housing Council (NMHC) indicate about 55% of apartment construction firms are experiencing delays. The COVID-19 pandemic has caused labor restrictions, ultimately affecting construction operations. Even though construction was deemed essential by 30 states, some have placed restrictions. In fact, a few states have stopped residential construction indefinitely, including New York.
New York’s Governor Cuomo indicated all non-essential construction is to be shut down. The exceptions in his order were hospitals, homeless shelters, etc., so all projects necessary to protect health and safety are to continue. Governor Murphy of New Jersey recently signed a similar executive order after initially allowing construction of all types of housing to continue in the state. New York currently has more COVID-19 cases that any other country outside the United States while New Jersey is the state with the second most cases in the country.
Meanwhile, all three jurisdictions in the Washington metro area still deem construction as essential. There are over 25,000 multifamily rental units currently under construction in the metro area, with another 15,000 units expected to start within the next 12-18 months. While Maryland, Virginia, and the District of Columbia still allow construction to proceed (including multifamily), there are still delays in sourcing materials and obtaining approvals. Firms are looking for alternatives. Sourcing materials from alternative locations and using technology to replace in-person duties such as inspections and approvals may be the new norm in the foreseeable future.
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