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Real estate developers built skyward this past decade, study shows

Sarah Paynter
Reporter

Dr. Frasier Crane, the star of the popular NBC sitcom “Frasier,” may have lived in a glamorous high-rise apartment, but the average apartment building in the 1990s had only three floors. 

Today, the average apartment building height has doubled to six floors, with 12% more apartment units per building than in the 1990s, according to a new RentCafe study on in major U.S. cities. Residential high-rises, with 13 floors or more, quintupled since the 1990s, increasing from 2% of construction in the 1990s to 11% of current new construction. Rising land costs drove development skyward over the past three decades, the study said.

“In urban areas, because there is a large amount of population density, you are not going to find a lot of open space to build,” said Doug Ressler, manager of business intelligence at Yardi Matrix, a business development and asset management company that provided construction data for the study.

In this current decade, the construction of residential skyscrapers, with at least 40 floors, grew 850% to 68 built from 2010 to 2018, the study found. There were only eight residential skyscrapers built from 1990-1999. 

The tallest residential buildings in the U.S. are centralized in dense, land-scarce cities like New York City and Chicago. New York City claims seven of the top 10 tallest residential buildings and has the largest total number of high-rise apartments built this decade. But the tallest residential building in the U.S., Aqua at Lakeshore East Apartments, is in Chicago with 87 floors and 474 units. 

Boston was a surprising frontrunner for high-rise construction, with high-rise residential buildings accounting for more than half (55%) of the new construction in the city — the largest percentage of construction in the country. That’s a far cry from the 1990s when there weren’t any high-rise buildings in Boston. High-rises have become popular even in multifamily markets like Austin and Charlotte that historically favored sprawling low-rises. 

Future may not be up in the sky

But not all cities are fans of high rises. Developers in the Northeast say they also face numerous regulatory and zoning challenges with density, building height and parking. Experts say that because of these constraints, the skyscraper trend will not continue infinitely upward. 

Residential high-rises, with 13 floors or more, quintupled since the 90’s. Graphic: David Foster.

“You see the binding constraints in New York City, for zoning, are a little more refined and stringent than, say, west of the Mississippi… Mid-rises are beginning to fill up the development pipeline,” explained Ressler.

Buildings with five to 12 floors will be the building of choice in the next decade, he said. Mid-rise buildings jumped from 6% of construction in the 1990s to 41% of construction in this current decade. 

Sarah Paynter is a reporter at Yahoo Finance. Follow her on Twitter @sarahapaynter

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