Why Are Developers Building So Many Apartments?

If so many apartments are sitting vacant, why are developers building more? I’m asked some version of that question almost every week. It is a very good question, considering you don’t have to drive too far to see a new apartment complex under construction or one that has just opened and is offering move-in specials.

I recently attended a conference regarding multifamily developments in Southwest Florida. What struck me was that the first group of panelists consisted of multifamily investors who were purchasing nonperforming assets and properties heading toward foreclosure, in some cases well below construction cost. The second group consisted of very successful multifamily developers discussing projects they had on the drawing board. I wanted to ask if these two groups of experts ever compared notes. How can one group be buying distressed complexes well below replacement cost while the other group is planning a new development?

According to Apartments.com’s summer 2026 figures, the national multifamily vacancy rate was approximately 8.2%. Southwest Florida’s vacancy rate is between 16% - 19%. The oversupply of apartments developed amid several events, including the mass migration to Florida during the COVID-19 pandemic, people seeking housing after the 2022 and 2023 hurricane seasons, and easier access to construction financing at low interest rates. Add these events together and you have the perfect environment for oversupply.

So, back to the question at hand: Why are developers still building? An apartment project can take three years to secure funding, acquire land, obtain zoning approvals and permits, complete construction and start moving tenants into units. Today’s vacancies do not necessarily tell us what supply and demand will look like when those projects are completed.

While parts of Southwest Florida currently have an oversupply of apartments, developers are also considering longer-term housing needs. A 2022 Florida Apartment Association study projected that the state would need to build more than 570,000 apartment homes by 2030 to meet demand. The study noted that Florida’s population grew by 2.7 million between 2010 and 2020 and projected an additional 3.2 million residents by 2030.

So, both groups of panelists at the conference looked at the same picture but had very different investment strategies. One group was buying distressed properties below cost, and the other group was looking toward the future and getting ready for the next wave of demand for apartments. The cycle of undersupply and oversupply of housing creates investment opportunities. The goal is to be on the right side of the cycle.