Viewpoints
By: Steven S. Ross, Broadband Communities
Apartments will soon overtake single-family homes in the majority of new residential construction, a massive shift that benefits the broadband industry and the environment. Can deployers make the residents happier?
Last year saw an all-time record of construction started on almost 620,000 new dwelling units in large multi-dwelling unit (MDU) structures. While there may be a decline for 2023 thanks mainly to bad weather, the backlog of MDU building permits continued to swell. So, the record of 2022 very likely will be matched in 2024.
For the broadband industry, all the outward signs are good. New MDU structures are the cheapest per-household to supply with fiber optic cable. Rebuilds in older MDU structures are in demand as building owners and condominium homeowner associations see the need to upgrade broadband wiring.
Vast shifts in sources of construction financing, decreasing demand for single-family homes, the politics of student loan forgiveness, sustainability, climate change and immigration policy are all in play, however:
- Population spurted a bit during the pandemic years, so families with young children and the ability to work at least some days at home have incentives to find bigger homes and apartments. But population growth is now roughly zero, except for immigration — legal, illegal, and quasi-legal.
- Rents are falling in many metro areas – a clear sign that vacancies exist. A vacant unit does not generate broadband revenue.
- In a nation where three out of four dwelling units are currently single-family, the push to apartment living has kept MDU construction far higher than the historic norm. More than a third of all dwelling units have been in MDUs for most of the past decade. In the past two years, it has been closer to half – one out of every two dwelling units is in a multiple-family structure and over 40 percent are in large MDUs averaging around 30 apartments each.
- For individuals, mortgages are expensive and likely to remain so at least through 2024. For builders and broadband deployers with access to pools of investor money to replace or supplement traditional bank financing, availability of funds has come at a price, but has been generally adequate. Investor appetites for MDUs could fall in 2024, however, if apartment demand weakens further.
There’s also a matter of the labor force needed by broadband deployers. Nationally, we add fiber broadband to about 8 million households each year. As federal funding ramps up, that will swell to about 10 million.
The existing workforce is aging. But will enough younger folks to replace the retirees and expand the workforce be attracted into an industry that will see growth in new connections drop dramatically in the next five or six years? Or will they be attracted by the prospect of ever-increasing broadband needs, assuring them a great future? Estimates of new worker demand are as high as 205,000 a year, according to the Fiber Broadband Association, and somewhat less from other organizations.
Perhaps we should not be as distracted by artificial intelligence – AI – and should pay more attention to what the politicians are doing (and avoiding doing) with regard to immigration, inflation policy and interest rates, job training, and even helping to make young families more mortgage-worthy with changes in student loan and bankruptcy policies.
