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Apartment Development Shifts From the Sun Belt to the Coasts

Apartment Development Shifts From the Sun Belt to the Coasts

The next wave of apartment supply could look very different, with New York and LA emerging as permitting standouts.

Nina Dale
August 28, 2026

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Good morning. Apartment builders are looking back to the coasts. Multifamily permitting jumped sharply in New York and Los Angeles as development activity cooled across several Sun Belt heavyweights.

🎙️ This Week on No Cap: What does it take to bring a downtown back? Bedrock CEO Jared Fleisher takes us inside Detroit’s transformation. (Thanks to our sponsor, Warespace)

CRE Trivia 🧠

What construction material, invented by English bricklayer Joseph Aspdin in 1824, now accounts for roughly 8% of global CO2 emissions?

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Market Snapshot

S&P 500

GSPC

7,730.99

Pct Chg:
+0.72%

FTSE NAREIT

FNER

854.18

Pct Chg:
-0.89%

10Y Treasury

TNX

4.676%

Pct Chg:
+0.012%

CME Term SOFR

1-Month

3.69%

Pct Chg:
-0.00

*Data as of 08/27/2026 market close.

Coastal Comeback

Apartment Development Shifts From the Sun Belt to the Coasts

New York and Los Angeles are ramping up apartment permitting while several longtime Sun Belt development leaders are tapping the brakes.

Coasts are cooking: New York led the nation with 35,888 multifamily units permitted over the 12 months ending in July, up 47.9% from a year earlier, according to U.S. Census Bureau data analyzed by RealPage. Los Angeles nearly doubled its annual total, jumping 97.8% to 16,789 units.

A tale of two cities: New York’s activity was relatively dispersed, led by Brooklyn with 8,604 units, the Bronx with 8,594 and Queens with 6,801. Los Angeles was far more concentrated, with 12,724 units — roughly three-quarters of the metro division’s total — permitted within the city itself.

The Sun Belt cools: Several markets that powered the recent apartment construction boom are pulling back. Dallas and Houston each permitted roughly 1,850 fewer units than a year ago, while Atlanta and Phoenix also slowed. Austin recorded the largest annual decline among markets highlighted by RealPage, down 3,921 units, followed by Chicago (-3,253), Orlando (-2,835) and Miami (-2,703).

Where builders are still betting: Washington, D.C., Raleigh/Durham, Seattle and Denver each added roughly 2,000 to 4,000 permits from a year earlier. Outside the top 10, San Jose (+4,281), Tacoma (+2,725), Salt Lake City (+2,534), West Palm Beach (+2,308) and Tampa (+2,001) also posted sizable gains.

Big picture: The top 10 permitting markets collectively accounted for 146,349 units, up 23% year over year but just 0.8% from June. Six of the 10 increased permitting annually, suggesting development hasn't disappeared so much as shifted geographically.

➥ THE TAKEAWAY

The development map is being redrawn: After years of Sun Belt-heavy construction, permitting momentum is shifting toward coastal and other high-demand metros. For multifamily investors, that could reshape where future supply pressure builds, with New York and Los Angeles emerging as key markets to watch.

✍️ Editor’s Picks

Claude now sources CRE deals: Terrakotta's Claude Agent is disrupting the CRE industry as we speak. Brokers can now automate LLC skip-tracing, find motivated sellers, and source off-market deals. (sponsored)
Private credit: Private credit is increasingly filling CRE financing gaps as banks pull back, with $56B in dry powder and more complex structures reshaping how risk moves through the market.
Permitting transparency: The EPA is moving to end federal requirements for public disclosure and comment on data center air pollution permits, potentially speeding development while shifting oversight to individual states.
Cost control: Know where project costs are headed, not just where they’ve been. Rabbet combines live budgets and forecasting to help developers identify financial risks earlier. (sponsored)
Property prices: U.S. commercial property prices rose just 0.2% year over year in July, as tight borrowing costs weighed on the market while CBD office values surged 9.9% and apartment prices fell 4.1%.

🏘️ MULTIFAMILY

Rental shift: Multifamily starts rose 5% year over year to 117,000 units in Q2, with 93% built for rent and growth increasingly concentrated in smaller metros and lower-density markets.
Rent freeze: A sustained NYC rent freeze could pressure multifamily property cash flows, asset values and bank credit quality, particularly for lenders concentrated in rent-regulated properties.
Columbus crossroads: Columbus apartment rents were nearly flat year over year in Q2, but peaking supply and stabilizing job growth will make the next six months critical for the market’s 2027 recovery.

🏭 Industrial

Freezer divide: Cold storage vacancy hit a record 7.7% in H1 2026 as demand weakened and tenants favored newer facilities, leaving older warehouses to absorb most of the pain.
Newnan acquisition: Public Storage acquired a 70,907 SF, 613-unit self-storage facility in Newnan, Ga., for $10M in cash, expanding its presence in the growing Atlanta-area market and strengthening its local footprint.
Logistics portfolio: EQT Real Estate sold a 46-building, 10.5M SF Southeast logistics portfolio to an LBA Realty affiliate, expanding the buyer’s regional footprint across 10 major markets.
Industrial momentum: Industrial net-lease sales reached $7.7B in Q1 2026, up 24.4% year over year, while cap rates remained relatively stable amid shifting investor activity and regional demand patterns.

🏬 RETAIL

Traffic leader: Dollar Tree’s same-store visits rose 4.8% year over year in July, outpacing Dollar General as affordability, seasonal shopping and easing fuel pressures boosted traffic.
Retail resilience: Core retail sales rose 4.8% year over year in July despite a 0.2% monthly decline, while apparel gains offset weaker online spending and economic pressures.
Retail recovery: More than 90% of surveyed retail markets are in recovery or expansion, outperforming other CRE sectors as low vacancy and limited development support demand.
Mall comeback: Enclosed malls are regaining investor attention as limited supply, stronger fundamentals and cheaper debt boost performance, with institutional capital potentially returning next.

🏢 OFFICE

Legal leasing: Law firms leased a record 7.3M SF in Q2, up 27% year over year, as larger transactions and expansion plans continued to strengthen office demand across major U.S. markets.
MOB mentality: Medical outpatient lending nearly doubled in the first half of 2026 as stronger investment sales, improving pricing, higher leverage and resilient income reignited investor and lender appetite for the sector.
Camelback trophy: Southwest Value Partners acquired the 222K SF Esplanade III for $86M, Phoenix’s largest single-building office sale of 2026, signaling renewed demand for top-tier Camelback Corridor assets.
Market stabilizes: U.S. life sciences real estate is nearing stabilization as venture funding rebounds and new construction plunges, though elevated vacancy keeps the recovery selective.

🏨 HOSPITALITY

NHL gamble: Alpharetta approved Jamestown’s plan to replace North Point Mall with a $1.5B-plus NHL arena and mixed-use project, but the redevelopment hinges on Atlanta landing an expansion team.
Global comeback: Highgate Hotels says U.S. hotels need international travelers back, whose longer stays, advance bookings and higher spending remain critical to performance.
McKinney megavenue: Venu Holdings’ $300M, 20,000-seat McKinney amphitheater is nearing completion and is expected to host its first concert shortly after construction wraps in early 2027.

📈 CHART OF THE DAY

CBRE’s cap rate outlook turned more cautious in H1 2026, with 63% expecting no change, while expectations for compression plunged from 42% to 20% and expansion rose to 17%.

Portland cement. Aspdin named his invention after limestone quarried on England's Isle of Portland; it is now the world's most widely used construction material, found in virtually every building type, from foundations to skyscrapers.

Apartment Development Shifts From the Sun Belt to the Coasts

The next wave of apartment supply could look very different, with New York and LA emerging as permitting standouts.

CRE Trivia 🧠