Big changes for the multifamily market
Multifamily projects were a hot topic at the 67th International Builders’ Conference in Orlando this week. The majority of people seem bullish on the multifamily market, but the majority also say the market is changing in some pretty dramatic ways. What’s different: demographics, the types of products being built and target markets (for both rental and for-sale properties), technology, and financing (believe it or not, lenders are willing to fund the right projects).
Here’s what stood out to me after three days of talking about the multifamily market:
- The U.S is the only industrialized country with population growth, which will drive real estate demand.
- 45% of the population under 20 is a minority. These are your future tenants or buyers.
- Women have caught up to, and in some cases, surpassed men in terms of education and earning potential. Your future tenants and buyers are more likely to be women. Single, educated, career women.
- 70% of adults in their 20s have never married, and married couples with children make up only 1 in 5 households.
- There is pent-up demand for product. People still want to rent or own their own place (although 1/3 of men in their 20s still live at home), it’s just happening for them later in life nowadays.
Types of products and markets
- Buyers and renters want options and the ability to customize. For rental properties, that can mean paint colors or window treatments. For buyers, many finish options need to be offered.
- Locating properties near outdoor activities like parks and biking and running trails is key, particularly for women. More women than men run, and when it comes to cyclists, 60% are female.
- Women also want lots of natural light, large closets, nice kitchens, and security. Security is a big selling point for women.
- If you’re targeting men, make sure to offer 2/bed 2/bath units. Men are more likely than women to live with a roommate and, interestingly, men are less willing than women to share a bathroom. Kitchens also aren’t a huge selling feature for men, so they’re more willing to accept a smaller space.
- In-house health and fitness centers are a nice option, but not required, especially in urban settings where a membership at a fitness center down the street is an option. Also, don’t lump the fitness center fee in with the monthly association fees. Let people opt-in if they want to pay for it.
- Community rooms, game rooms, or leisure space within the building is key for male renters/buyers. Large screen TVs for watching sports and amenities such as a pool table or darts are whymen get together. For women, activities are howthey get together, so amenities are secondary.
- Parking isn’t as much a driver as people think. Car usage patterns are changing dramatically. Gen Y is buying cars and getting drivers licenses at much lower rates than other generations. It’s much more important to build close to public transportation.
- Technology is a given. Buildings should have high-speed wi-fi, cell phones should work anywhere in the building without interference, and units should have extra outlets for all of today’s equipment that gets plugged in. And consider deleting phone jacks. Fewer and fewer people have landlines.
- Along the lines of technology, monitor what’s being said about your building and respond quickly. Disparaging comments online can ruin a building’s reputation.
- I heard from representatives from Bank of American and PNC that lenders have an oversupply of funds and they’re looking for good borrowers. So, bottom line: financing is available.