America’s Apartment Buildings Are Getting Bigger and Taller

livemint.com:

More new rental apartments are coming to the market than at any time since the 1980s. Really big buildings are a major reason why. Apartment developers are creating soaring properties with more units.

They have seized on the willingness of some local officials to relax zoning and other laws and institutional investors to bet on smaller cities, enabling developers to go bigger than ever before. U.S. cities added more than 2,900 buildings with more than 200 apartment units between the years 2021 and 2023.

That is 17% more than were built from 2018 to 2020. It also outpaced the increase in the number of smaller properties of at least 50 units, according to property data firm Yardi. While office towers have typically shaped the American city skyline, builders are now pushing apartments higher into the clouds.

High-rises were just 2% of new apartment supply during the 1990s, but rose to 14% in 2022. Milwaukee’s tallest ever rental tower opens next month at about 530 feet. In Atlanta, a 60-story rental apartment and office building is under way in what would be the tallest tower built in that city in more than 30 years.

The bigger approach to multifamily development reflects the evolving economics of the business and the dynamics of the current housing market. Rising construction and other costs mean that developers often need to build more units to be profitable. For years, they have been designing smaller apartment units, allowing them to fit more into each building.

The average square footage of a new apartment unit fell 6% from 2013 to 2022, Yardi said. Lack of available land is also causing taller buildings to sprout. In Dallas, the scarcity of 4-acre parcels, typically needed to build the common, entire-block apartment