Are we really in a recession? Not if you ask the builders of multi-family apartment communities.

As the for-sale market of single-family homes and condominiums continues to fight for survival, multi-family apartment communities are finally getting access to land, would-be home buyers are waiting out the market and the those fleeing foreclosures are taking refuge in the rental pool.

The National Association of Homebuilders (NAHB) reports that although last year's 309,200 multi-famiily starts are no match for the boom years of the '80s multifamily builders are still see a strong market on the rental side of the industry for at least the next five years.

Rents continue to increase, vacancies are drying up, and property managers are beginning to experience the first wave of renters made up of a combination of Generation Y members and immigrants.

The credit crunch is a factor, as is the conversion of single-family and condos to well-priced rentals, but for well-established multi-family rental builders, times are undeniably good.

In fact, according to some industry gurus, the multifamily business is fundamentally as solid as it has been in the 35 year in some areas. One of the key factors in this robust market is that multi-family builders are being careful not to overbuild in key markets that include most major metros in California and Texas as well as in Seattle, where it is reported that the market could be the best apartment market in the country.

Multifamily builders are finding success with luxury product as well -- a trend that is expected to continue as investors push for urban infill development of mixed-use and transit-oriented communities that offer renters a live/work/play environment.

Although there still seems to be plenty of available money, investors are being cautious this time around, working primarily within the framework of well-established capital relationships.

Experts agree that there will be fewer multifamily starts this year compared to 2007 as absorption rates increase, but activity is expected to increase from that point forward.

Published: May 27, 2008

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