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It has been hard enough to build apartments over the last couple of years. But if you\u2019re eyeing an urban infill project? Good luck with that.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cIt’s still extremely difficult to develop traditional multifamily infill,\u201d Todd Wigfield, co-head of Greystar\u2019s Americas principal business, told Multifamily Dive. \u201cMid-rises and high-rises are just really, really hard to get done.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n In the second quarter of 2025, <\/span><\/span><\/span><\/span><\/span><\/span>multifamily construction saw growth<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a> in smaller geographies, with gains across all areas except large metros, where more dense development is common, according to the National Association of Home Builders\u2019 Home Building Geography Index (HBGI).<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n In Q2, the market share of apartment starts in large metro core counties continued a long-term downward trend, falling 12.3% on a four-quarter year-over-year moving average.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n New construction in large metro suburban counties and small metro core counties was essentially flat, while large metro outlying areas and small metro outlying counties saw growth of at least 20% YOY.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cUrban core and inner suburb multifamily development continues to be soft, particularly in larger metropolitan areas,\u201d NAHB Chief Economist Robert Dietz told Multifamily Dive in emailed comments.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Greystar\u2019s Wigfield said that developers have been focused on the \u201couter rings\u201d while also prioritizing much-needed attainable, affordable housing. \u201cReally trying to hit the market needs and achieve financeable yields is where we\u2019ve been focused,\u201d he said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n It’s easy to understand why. Bigger, high-dollar deals have lower yields, according to Wigfield. \u201cThey tend to be more expensive,\u201d he said. \u201cAnd so it’s just a big risk.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n In addition, it takes a fairly sizable organization to write the check for high-density $200- or $300-million projects. Trying to get those types of projects through investment committees has been \u201cextraordinarily difficult\u201d over the last couple of years, according to Wigfield.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cWe had to look at it as a company and say, \u2018Is that worth the risk? Is that what we should be doing at this time in the market?\u2019\u201d Wigfield said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n For a company like Greystar, with a \u201cbroad spectrum of investments and markets across the country,\u201d it is easier to develop other opportunities, according to Wigfield. \u201cWhen you start to look across the board and level set, [high-density development] certainly didn’t feel like the place where we needed to be,\u201d Wigfield said. \u201cAnd I think a lot of others have felt the same.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Part of the reason high-density development doesn\u2019t make sense right now is the glut of projects in many metros. \u201cThere were a lot of high-density projects that were delivered in a lot of the markets,\u201d Wigfield said.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n At least supply is slowing. After 10 quarters of more than 100,000 units being delivered, <\/span><\/span><\/span><\/span><\/span><\/span>completions fell to 89,400 units<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a> in Q4 2025, according to RealPage. But many units still need to be absorbed before the market returns to normal.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cMore inventory has to clear,\u201d Wigfield said. \u201cThat needs to happen. We need to see really good stabilization of rent rolls.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n NAHB\u2019s Dietz thinks regulatory reform is also needed to incentivize higher-density development. \u201cThis could include reforms to parking requirements, permit and impact fees, and zoning\/permitting rules and processes,\u201d he said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n A group of lawmakers seems to understand those hurdles and is attempting to address them with the <\/span><\/span><\/span><\/span><\/span><\/span>new bipartisan Build HUBS Act<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a>, which aims to boost the construction of housing near transit hubs nationwide. Among other changes, it would <\/span><\/span><\/span><\/span><\/span><\/span>waive certain National Environmental Policy Act requirements<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a> for office-to-residential conversions and infill development.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n In high-density areas, barriers to supply are often cited as a roadblock. But Dietz sees demand issues as well.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cWe will need to experience an uptick in hiring, particularly for younger individuals,\u201d he said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n However, the unemployment rate among those aged 16 to 24 is rising, ending 2025 at 10.4%, up from 9% in late 2024 and 8% in late 2023, according to LeaseLock Chief Economist Greg Willett.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Artificial intelligence could push those percentages even higher. For instance, Amazon and other tech employers <\/span><\/span><\/span><\/span><\/span><\/span>have cut jobs and pointed to AI<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a> as the culprit, according to HR Dive.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cWhile it’s hard to pinpoint how much of that rising unemployment reflects AI’s ability to cover tasks previously done by entry-level workers, shifts in the way we do business do appear to be having some impact on the numbers,\u201d Willett told Multifamily Dive in emailed comments. \u201cRecent grads are ending up back home with their parents more frequently than was the case a year or two ago.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n If younger people continue to hemorrhage jobs, apartments of all types will take a hit. \u201cYoung adults forming new households make a strong contribution to demand for apartments,\u201d Willett said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<\/p><\/div>\nThe math doesn\u2019t pencil out<\/span><\/span><\/strong><\/span><\/span><\/span><\/h3>\n
What will bring high-density development back?<\/span><\/span><\/strong><\/span><\/span><\/span><\/h3>\n
The demand issue<\/span><\/span><\/strong><\/span><\/span><\/span><\/h3>\n