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America’s Apartment Buildings Are Getting Bigger and Taller

Updated: Mar 17

Snitz's Big Four for young urban adults feeling disconnected from humanity:

  • Isolate during the pandemic. Then work remotely afterward.

  • Become fearful to go out because of rising crime.

  • Become more insular; spend more time on social media

  • Have people live in anonymity in giant skyscrapers where they don't know their neighbors.  Community killers.


America’s Apartment Buildings Are Getting Bigger and Taller

Rising construction, other costs mean developers are adding more units to be profitable

At 40-plus stories, The Couture in downtown Milwaukee will become one of the city’s tallest residential buildings when completed later this year.

By Will Parker, WSJ

March 4, 2024


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 Couture is scheduled to open to residents in April and rents range from about $2,000 a month for the smallest apartments up to nearly $12,000 for a penthouse.


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 buildings known as Texas doughnuts, has led more developers to build upward on smaller lots, said Ben Brewer, senior managing director in the Dallas-Fort Worth office of developer Hines. The company’s 40-story rental tower, The Victor, is one of Dallas’ tallest residential buildings.


Most of the large apartment buildings going up now were planned at least a few years ago, when rents were rising fast. Rent growth has since slowed in most of the country, but steady tenant demand makes multifamily development still appealing. Record home prices, limited inventory of homes for sale and steep mortgage rates are keeping relatively-high earners in rentals for longer.


Occupancy rates for urban apartments have come down but remain at levels considered high in most cities. Some downtowns have added corporate jobs and new residents, despite continued uncertainty about office markets and remote work.


Developer Rick Barrett is among the recent crop of builders betting on continued demand for downtown rentals. His company’s new Milwaukee skyscraper, The Couture, counts 322 units and tops out at 46 stories. Among the project’s backers are large East Coast investors, including WhiteStar Advisors, a pension-fund manager. The building opens to residents in April and rents range from about $2,000 a month for the smallest apartments up to nearly $12,000 for a penthouse.


The Couture sports a crescent-shaped outdoor pool with views of Lake Michigan and 10,000 square feet of shared space, including a gym, lounge and dog park, which are standard at many other high-end developments.


A zoning change from the city was necessary to build The Couture, Barrett-Lo Visionary Development said.


“When you have larger scale projects, you can have more amenities,” he said. “And when you have more amenities, you win the amenity war.”

Like many developers, Barrett needed a zoning change from the city to build The Couture, and elsewhere other apartment megaprojects also depend on greenlights from local government.


In Baltimore, MCB Real Estate is seeking a zoning variance for its redevelopment of Harborplace, a 1980s shopping complex on the city’s Inner Harbor. MCB’s plans call for two high-rise towers and 900 rental apartments.


Young couples and singles make up most of the potential market, according to a 2023 housing report commissioned by the Downtown Partnership of Baltimore, a group that advocates for local businesses.


“We’re leaning into a trend that was already happening,” said David Bramble, managing partner of MCB.


A rendering of redevelopment plans for Baltimore’s Harborplace, a 1980s shopping complex. The plans call for more than 900 rental apartments.


Some cities are tweaking zoning and other building codes to make larger-scale construction more feasible. Last year, Austin, Texas, became the largest city in the country to drop parking minimums for new construction projects, eliminating a major expense for many builders. Portland, Ore., Minneapolis and San Jose, Calif., have made similar changes to their parking minimum rules.


In previous years, an urban apartment boom might have been dominated by condominiums, not rentals. But condos are now viewed by many builders as riskier propositions and can be more difficult to finance, developers said. Today’s higher interest rates also mean a declining number of people can afford to buy condos, buoying demand for rental units.


In Chicago, Related Midwest plans to build two all-rental skyscrapers—one reaching nearly 900 feet in height—at a downtown site where condos were once planned. “Chicago was almost exclusively a condo market pre-2008,” said Curt Bailey, president of Related Midwest. “That largely changed with the real estate crash.”

Write to Will Parker at will.parker@wsj.com

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