State of the Industry: Four Headaches in Multifamily Housing
It’s no secret what’s keeping multifamily investors, marketers, and decision makers up at night. Hint: it’s not their neighbors.
The effects of the past year rippled through our industry in a number of ways: investor funding, PropTech, property types, and construction timelines, plus the eviction moratorium.
Here’s the deal, we believe data tells stories. So, we dug up data from G5, ALN Apartment Data, and other multifamily-specific sources, to share the data-wealth and understand what was happening in our industry. Here is our State of the Industry report, CliffNotes style. For a deeper dive, download the report, and view our State of the Industry online hub for city-specific information.
#1. Playing It Safe
Investors are cautious. As such, access to capital funding is declining. Long story short: in the housing and construction world things are changing, FAST, due to supply chain pressures, relocation, low mortgage rates, etc.
For example, this spring a sheet of OSB particle board cost nearly the same as a Gucci purse…and then, a few months later, the cost had dropped to about the price of a brew-pub burger. Investors love a sure bet. So, when things feel unstable, they wait for things to settle down.
What does this mean for marketers? With the volatile cost of building materials, your properties might be pushing off renovations until material costs stabilize. So, if your renters move out, you’ll be competing against brand new units coming online, not to mention other low occupancy properties offering concessions. So, make it a priority to keep your current residents by keeping them happy. Download the report, for more information.
#2. Location, Location, Location
Renters spent A LOT of time in their homes last year. And although, we hear again and again that correlation doesn’t equal causation, let’s connect a few anecdotal dots, with data.
First: Garden Properties, they’re trendy and in high-demand, and we think it makes sense. If you can’t go out, you’d love for a little outside space attached to your
home-office/gym/sleeping nook, home. This isn’t a ‘burb-only trend either. In NYC, garden property types account for 33% of the properties that are coming online, and 50% of the properties in the pre-construction stage, which seems like a shift from the usual urban building style. Hover on the graph below to see the percentages of property types under construction nationally.
PropTech, MarTech, all. the. tech. We’ve said it before, technology adoption is a one-way street. One bright spot from last year is that instead of thinking tech is only for millennials, we’re seeing more diversity in who is engaging with technology. Smart locks, package portals, and reservable Peloton bikes are the amenities expected by the tech-savvy. In section one, we recommended keeping your current renters, by keeping them happy. High-tech amenities are one way to do so. Maybe you’re thinking: Perhaps now isn’t really the best time to add smart locks to every single unit. And after last year, that makes sense. Two options: consider adding them when renters move out to attract new renters, or think about property-wide features that benefit ALL renters.
#4. Eviction Moratorium
It’s lifted. Of course there are some state-by-state differences, so how it impacts the industry as a whole is still unfolding. Here’s a data story to consider. New York, Dallas/Fort Worth, Seattle, Los Angeles, and Washington D.C. are the top five markets with the most new units in the construction pipeline. All five cities are offering concessions, have negative occupancy growth, and are struggling to connect with move-in ready renters. Now add that these metros take two and a half, to almost three years to take a property from pre-construction to stabilized. The truth is, this might get worse, BEFORE it gets better.
These national trends are helpful to stick a pin-in and pay attention to, but what about city-specific trends? We dug into those for Boston, Chicago, Dallas/Fort Worth, Denver, Houston, Las Vegas, Los Angeles, Miami, Nashville, New York City, Philadelphia, Portland, Salt Lake City, Seattle, and Washington D.C., too. Learn more by downloading the multifamily State of the Industry Report, and exploring our city-specific data deep dives.