The multifamily sector may expand by as much as one-third this year, according to projections from Fannie Mae, as construction outperforms the typical recovery pace.

Multifamily housing starts are expected to grow from 178,000 to 231,000 this year and then increase to 278,000 in 2013, according to the GSE's forecast. The number of permits issued for multifamily buildings rose in February as single-family housing construction slowed.

As the sector's activity picks up, national outstanding multifamily mortgage debt grew to $840.8 billion in the fourth quarter. The highest level on record was $853.2 billion, reached in the third quarter of 2009. Fannie Mae accounted for 21.2 percent of the market, making it the largest single entity in terms of multifamily debt holdings. Freddie Mac and Ginnie Mae held 12.2 and 7.2 percent, respectively. Ginnie Mae's portion of the market was the fastest-growing for the seventh consecutive quarter.

Life insurers and other market investors also increased their involvement in the apartment sector, suggesting they remain confident its strong performance in recent years will continue. As new construction comes online in the next two years, rental property management companies may find they have increased competition or business opportunities.