Part 1 summarized that demand for new apartment complexes has been met regarding the upscale multifamily market. The overdevelopment of that sector can be pretty clearly seen and the consequences to occupancy/rental rates are predictable except… if you are in Kansas City, or Columbus, or Cupertino.
Kansas City, MO: A few years ago, sleepy Kansas City was used as a test lab for the first massive installation of Google Fiber. Suddenly, many noticed that climate, housing affordability, and healthcare were excellent. This area has been booming ever since, in the suburbs and downtown. Many downtown developments were adaptive reuses of small floor plate office buildings that had fallen largely vacant. Now KC has a vibrant urban core, and announced plans for free Wi-Fi in a 50 block area.
Columbus, OH: Columbus is ranked tops in proportion of new rentals and speed of lease up among all multifamily markets in the country. Jobs growth, a well regarded major university, and a latent supply pipeline combined to spur significant apartment development in this formerly staid midwest market. It is notable that Columbus (along with Kansas City) competed as finalists in the U.S. Department of Transportation’s “Smart City Challenge”. Columbus won the prize in summer 2016.
Cupertino, CA: Apple is completing its new 2.8 million square foot campus in Cupertino, but this really is about all of Santa Clara County, where Apple employs over 40,000 people and is expected to add tens of thousands more in the next few years. Cupertino, Sunnyvale, and San Jose can’t build apartments fast enough to keep up with demand. The only problem: the Santa Clara County multifamily industry is not building affordable properties (apartments for folks who are not software engineers). So far that is not getting done.