Over 56 developers, operators, and investors across the country were surveyed in John Burns Research and Consulting's recently-launched Apartment Developer and Investor Survey. The November 2023 report collected two month's of data to find clarity in the multifamily market, including capital access, lease-up challenges, and the overall development pipeline.
Overall, Burns has outlined four key takeaways for developers and investors to be mindful of in 2024.
Burns Apartment Developer and Investor Survey Takeaways
1. Apartment developers anticipate a dramatic decrease in construction and new starts
As post-Covid construction has peaked, developers expect new apartment starts to slow by 20ā50%.
Forty percent of developers surveyed have over 500 units currently under construction. While a surge of projects will finish by 2025, future starts are believed to slow dramatically.
Nearly all respondents have found securing financing to be increasingly difficult.
2. Investors āsidelinedā as interest rates create cautious lenders
Apartment transactions have come to a halt as financing tightens and pricing uncertainty grows. Only 16% of those surveyed reported selling an apartment property in the last six months, and 70% say they are not planning to purchase in the next six months.
There was little consensus on current pricing levels. A few respondents believe their assets are undervalued, while the rest are split between seeing their assets as fairly-priced or overvalued. According to Burns, this disparity reflects the ongoing disconnect between buyers and sellers.
3. Affordability is an important factor for residents of newly opened communitiesĀ
A significant factor for resident retention is affordability. The research finds that the most common reasons tenants won't renew their lease is to move into a less expensive apartment or to move in with roommates instead.
Three-quarters (75%) of respondents are averaging double-digit monthly leases at unstabilized communities as well, indicating healthy lease-up trends.
4. Thoughtful design and amenitiesāespecially service-oriented onesāmust be superior
According to Burns, developers have underscored the importance of project design and high-quality amenities. Those surveyed indicated that new communities must have amenities that are in-line, if not superior, to the competition.
Some have also begun focusing less on physical amenities like pools and parks, and more on service-oriented amenities such as concierge services.
Click here to access the entire Apartment Developer and Investor Survey.
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