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There were 2,245 multifamily building permits approved in 2022, which is the most ever in city records that go back as far as 1960, and it's unlikely there were more in any year before that.

"I'm guessing that's the most ever," said Andrew Thierolf, a planner with the Lincoln-Lancaster County Planning Department.

In fact, since at least 1996, there hasn't even been a two-year span with that many apartment permits.

Though the 2022 number is an outlier, it's part of a trend since 2019 of increased apartment construction in the city.

From 2019-2022, there were 5,050 apartment permits filed in the city. By contrast, in the previous 11 years, there were 5,743.

Thierolf said an update two years ago to the city's Comprehensive Plan for land use encourages more multifamily housing, and the Planning Department has definitely been supportive of those projects.

There's also been an increased focus on and more money available for affordable housing projects.

"But, I'd say the push has come from the development community," he said.

Steve Gries, a senior associate broker with the Lund Company, an Omaha-based commercial real estate firm, said there are a couple of market factors driving the apartment boom.

One of those is a "massive, massive housing shortage," he said.

Gries puts out a report analyzing commercial real estate in both Lincoln and Omaha, and one of the sectors he follows is multifamily housing.

He noted in his most recent report that single-family home construction dropped off in Lincoln after the Great Recession and never really recovered, leaving a gap between the need for housing and what's actually being built.

"Multifamily is trying to catch up with that, but it's just a huge, huge gap," Gries said.

Another market-based reason is the increased cost of homes.

Thanks to COVID-related labor and material shortages and supply chain issues, construction costs rose sharply in 2021 and 2022. While that has affected both multi-family and single-family builders, it has affected the price of single-family housing more.

The median price of a newly built home in Lincoln was more than $406,000 at the end of 2022, almost $100,000 higher than it was at the end of 2019, according to the Realtors Association of Lincoln. The median price of existing homes was $255,000 at the end of last year, up more than $65,000 from 2019.

Throw on top of that the rise in interest rates from around 3% at the beginning of 2022 to more than 6% now, and it's made owning a home unaffordable for many people.

A recent report from the National Multifamily Housing Council showed that in the fourth quarter, the average monthly cost of owning a house was $1,176 more than renting an apartment, the largest gap since 2006.

"There's just a ton of people out there that would normally be buying homes right now (but) they can't. They can't afford it," Gries said.

He pointed out that those conditions are not unique to Lincoln, and a shift to building apartments is occurring all over the country.

According to a report released earlier this year by the National Association of Home Builders, multifamily housing starts were up 15% last year across the U.S., topping an annual pace of 500,000 units for the first time in more than a decade.

The organization said there currently are about 943,000 apartment units under construction nationwide, nearly 25% more than a year ago and the highest level since 1974.

The Home Builders report, however, predicts that multifamily housing starts will fall sharply this year — down 28%. It's not clear whether Lincoln will see a similar downturn.

Through the first three months of the year, there have already been more than 500 building permits for new apartment units, which is on par with last year's pace.

In addition, Thierolf noted that Planning Department zoning approvals for apartment units topped 2,000 last year.

While the department doesn't track those numbers from year to year, he noted that 2,000 is "quite a bit."

"We're still seeing a lot of demand for new apartments being developed," Thierolf said.

Gries' report shows nine large Lincoln apartment complexes currently under construction with nearly 1,800 units that are forecast to open sometime between the second quarter of this year and the second quarter of 2024.

There also are developments proposing several hundred more apartments currently working their way through the city approval process.

"There's going to be a lot of apartment units hitting the market in the next couple of years, but my guess is they'll all get eaten up," Griess said.

Despite all the new apartments being built, the vacancy rate remains low, especially in Lincoln. According to his company's report, Lincoln's rate was just 3.4% in the fourth quarter. By comparison, the rate was 5.4% in Omaha, 6.4% in Des Moines and 7.1% in the Kansas City area.

However, Gries said it's almost inevitable that the apartment market will have to cool off soon.

Despite the demand for apartments, with construction and land costs continuing to grow and interest rates climbing higher, "It's getting harder and harder and harder to make the numbers work," he said.