The apartment boom in Maryland appears headed for a slow down as big banks nationally put the brakes on lending for multifamily projects.
The Wall Street Journal reported Tuesday that credit markets for projects nationally are drying up. MPF Research found national demand for apartments drying up, according to the newspaper, with only about 57 percent of units delivered in the fourth quarter leased.
Toby Bozzuto, CEO and president of Greenbelt-based The Bozzuto Group, which is involved in new Baltimore apartments such as the Anthem House and Liberty Harbor East, told the newspaper credit for multifamily projects is disappearing.
“Our business has radically changed,” Bozzuto said in the article. “I haven’t seen anything this seismically different since 2008, when credit dried up.”
If indeed the apartment market is slowing up that maybe bad news particularly for Baltimore. Much of the new development activity in the city has centered around new luxury apartments around the Inner Harbor or converting former office buildings downtown to multifamily buildings.
Supporters of downtown and Mayor Catherine Pugh have touted in recent months the high occupancy rates in these projects. But a growing economy finally producing wage growth could draw tenants away from apartments and into the housing market.
The news comes on the heels of a recent report from Dodge Data & Analytics, which found construction starts in the Baltimore-Towson metropolitan area increased 29 percent in 2016 from the previous year. Those start numbers were goosed by multifamily projects, such as the $182 million investment in multifamily at Harbor East, the $107 million 414 Light Street Apartment project and the $171 million 1 Light Street building.
“The large increase in 2016 relative to 2015 for the Baltimore-Towson MD metropolitan area was due mostly to a 55 percent jump for multifamily housing construction starts,” Robert A. Murray, Dodge Data & Analytics chief economist wrote in an email.