Multifamily Trends After 2020
1. C-19
The year 2020 was like no other, and we want to right away address the giant tyrannosaurus in the room – Covid-19. We can all agree that's fair to say that no industry left untouched after the virus had ravaged the nation, and the world as a whole. Some changes came dynamically through people adjusting and adapting their lifestyles to the new reality, and other changes came through forced regulations, merits of which may be debated forever, but that's beyond our scope of expertise. What we do know, is that multifamily housing has been hit hard from all sides of the issue. From local governments suspending evictions, to implementing new sanitation procedures – no stone has been left unturned in lives of developers, property owners, investors, and tenants.
• A study published in the USA Today claims that in September 2020 more than six million households in the US missed their rent or mortgage payment.
The raw data associated with this finding is as follows: In September, 8.5% of renters, or 2.82 million households, missed, delayed, or made reduced payments, while 7.1%, or 3.37 million homeowners, missed their mortgage payments.
• A RentCafe survey of 6,000 renters found that more than half of them would move as soon as they find a place that better suits their new needs. Those needs include more space, better isolation, better suitability for working from home, etc.
• An AGC study conducted in April found that half of new multifamily housing projects in development have been halted.
2. Virtual Tours
This one is a combination of virus related regulations, and developments in technological innovations. Human interactions being on hold and the future of how we will interact with one another is up in the air. Thankfully we now have the technology that allows real estate owners and property managers to move their jobs to virtual reality. Indeed even before the virus, virtual tours for real estate showings and self-guided tours with the help of VR and AR software and apps has been on a steady rise.
• According to The 2020 NMHC/Kingsley Associates Apartment Resident Preferences Report – 17% of residents surveyed said they would prefer to tour a unit and building without a leasing agent.
3. Luxury Amenities.
Luxury amenities, future-proof appliances, smart home systems, and high end fixtures and finishes are our bread and butter. At Mega Supply Pro, we make them more accessible and affordable than they've ever been by leveraging our direct relationships with manufacturers and logistical partners around the world, and by eliminating redundant middlemen with their redundant markups.
The competitive environment developed in the multifamily market in the past decade is forcing developers and property owners to offer the latest conveniences to their renters. Things like smart appliances, IoT integrations, app-controlled security systems, ceiling fans, toilets, refrigerators, window coverings, and access control systems have a direct linear relationship to tenant retention rates – there is no argument.
Rooftop infinity pool at The Atlantic - a Post Brothers/Mega Supply Pro collaboration, Philadelphia, PA, 2018
The coronavirus has forced apartment and condo complexes to shut down their common areas and non-essential amenities, and residents increasingly expect multifamily buildings to offer luxury amenities and other cool stuff right in their apartments.
Some of the most desirable amenities include:
• In-building convenience stores and restaurants
• Mailroom management software integrations with package alerts and lockers
• Video intercom systems
• Complementary internet and TV packages
• Coworking spaces and conference rooms
• Pet grooming services and dog parks
• Children's play areas
• Electric car chargers
• Luxury plumbing fixtures such as TOTO toilets and bidets
• Custom kitchen cabinetry and expansive closet space
• Gyms and exercise spaces
• Green spaces, such as green roof decks and patios
• Swimming pools with recreational areas
• Theater/studio spaces
4. Sun-Belt and Coastal Cities
Americans began flocking to cities in the late 2000s in numbers never seen before. This influx naturally caused rent prices to soar. A renter in Manhattan pays on average $3,100+ per month – multifamily rents have climbed 39% since 2009, or an average of 3.3 percent per year, according to a report by CBRE.
This has caused a shift in where Americans are living. Since 2010, the five metro areas that have seen the largest growth in renters are all cities located in the Sun-Belt: Dallas, Houston, Miami, Atlanta, and Phoenix. With most of large coastal metropolitan areas seeing a healthy influx of professionals and working millennials as well.
Older cities such as New York, Chicago, Boston, and Philadelphia are responding to the demand by developing new sprawling metropolitan areas with expansive green spaces and outside cafes.
In the post Covid era we may see a reversal of this trend. Driven by search for greater affordability, availability of space, and ability to work remotely, people are leaving cities in droves, but it's not clear how sustainable this trend is over time.
Piazza Terminal - a Post Brothers/Mega Supply Pro collaboration, Philadelphia, PA, 2020
5. High Occupancy
According to Census data, since the year 2000, the number of US renters in American cities has grown by an average of 31%. In 2019, the occupancy rate of rental units in multifamily building was 96.3% and climbing – the highest since the turn of the millennium.
According to the National Apartment Association, the US will need an additional 4.6 million new multifamily house units by 2030 – an average increase of 328,000 new units every year.
Of course, these numbers are pre-COVID and will inevitably be impacted by the virus. To what extent is uncertain, but there is help on the way in terms of new multifamily units currently being constructed.
The Fairview - Tester Construction/Mega Supply Pro collaboration, Philadelphia, PA, 2020
In the last ten years, the number of multifamily residential housing construction projects has exploded with over 2 million units being constructed. In 2020 there are over 370,000 new units in multifamily residential buildings in development, with over 30% of those units residing in multifamily housing complexes of 20 or more units. That is over double the multifamily unit growth in 2019.
Mega Supply Pro has been positioned firmly on the forefront of growth in multifamily housing development. We are here to help developers, builders, property owners and managers to attract residents and see their tenant retention rates go through the sky. We help real estate developers slaughter their competition by being their one-stop-shop for procurement and sourcing of building materials and finishes, and for solving their logistical challenges by streamlining delivery schedules and effectively eliminating waste.
Contact us for more info.