The Fascination with Multifamily Development
The multifamily market remains a hot commodity in the world of commercial real estate. Over the last decade, there has been a plethora of multifamily construction taking place across the United States. The attraction of multifamily development is so profound that investors are waiting for the day that supply outweighs demand. However, as it stands today, that is nowhere close to happening.
As the Great Recession made its mark on the economy, it also left its mark on the multifamily market. The number of single-family homes that have been converted to rentals during this time sparked extreme interest. As the economy began to turn the corner, the demand for urban living took off initiating the boom in multifamily construction.
Trends To Look Out For
Amenity-Rich Apartment Buildings
According to a study by the National Multifamily Housing Council, 55% of renters said they wouldn’t enter a lease that didn’t have a fitness center. Furthermore, 7% of people indicated that they specifically decided to rent rather than buy because of amenities. Since living spaces tend to be on the smaller side, residents are making their decisions based on amenities such as a gym, pool, hot tub, community grill/fire pit, high-speed internet, and parking storage. They are relying on common rooms for entertaining guests to offset the size of their living space.
Growth in luxury apartments
Developing amenity-rich apartments is part of a growing trend in high-end apartments. Apartment List released a study unveiling the fastest-growing segment in the U.S. housing market is that of high-income renters, households earning at least $100,000 a year. At a moment in time when household incomes increased by 7%, the number of high-income renter households increased by nearly 48% from 2008 to 2017.
Another driving force for the growth of luxury apartments is the more onerous task of qualifying and securing a mortgage loan in today’s economy. Even though incomes have risen at a steady pace after the Great Recession, the harsh mortgage loan criteria coupled with student-loan debt has made renting the most financially feasible solution for high-income households.
Over the last few years, urban areas have witnessed a surplus of young, well-educated, high-income renters flocking to the cities for the downtown lifestyle and a higher concentration of jobs.
Where the most growth is taking place
The focus today has been shifted to a work-live-play mentality; known as the 18-hour environment. Manyspaces are being repurposed and redeveloped to include aspects of multi-family, office, and retail to embrace this growing trend.More and more companies are migrating to these environments. For example, our tenant representation services recently helped Smile Direct Club grow from 15 to 2,000 employees in Nashville in just two years. That shift coupled with a low cost of living, good job demand, warm climates, and friendly governments is why we are seeing so much growth in the following locations:
- Nashville, Tennessee
- Denver, Colorado
- Raleigh, North Carolina
- Charlotte, North Carolina
- Austin, Texas
- Houston, Texas
- Phoenix, Arizona
- Orlando, Florida
Director of Opportunities