The multifamily market has been an extremely active market in recent years, with absorption increasing in many major markets such as Dallas, Atlanta and Chicago. The competition is stiff for those looking to development new multifamily properties and it will take multiple defining factors to set multifamily properties apart. Let’s take a look at four multifamily trends we are watching as 2017 comes to a close.
A Step Up in Amenity Offerings
Amenities now must go beyond the traditional gyms, business centers and pools that multifamily units generally offer. Amenities will need to reflect the lifestyle of the residents by including things such as bike rooms, high-tech gyms with Pandora and Bluetooth syncing, grocery delivery, resort-style pools, and various rooftop decks. Concessions are also set to increase as more units come online and apartment complexes are competing with numerous other complexes. Many complexes are offering 1-2 months free and move-in fees waived. We will see this continue as more complexes are developed.
Under-Construction Totals are Increasing
According to CBRE Research, May 2017’s seasonally adjusted total of 602,000 multifamily units under construction was down slight by .01% from the prior month, but was up from 2016. On a year-over-year basis, the May total of multifamily units under construction reflects a 5.6% increase. As we see an increase in population and as millennials continue to hold off on buying homes, we will continue to see an uptick in construction on multifamily properties.
Investors are Looking Beyond Primary Markets
As more companies are choosing to place headquarters in secondary markets, multifamily property development is following suit by creating multifamily units within secondary markets to accommodate the growing workforce in these areas. According to JLL, secondary markets comprised 44.6% of multifamily transaction volumes at mid-year, as investors look for opportunities beyond the primary markets. JLL also reported that the appetite for investment remains stable for the sector across the buyer pool given historic sector performance and favorable demographics.
According to Multifamily Executive, the demand for multifamily housing will continue to expand in the next year, across many demographic lines, in large part for the large millennial and boomer generations and in both student and senior housing. Developers will work to meet the increasingly sophisticated expectations of the residential and multifamily market sector.
The Future of Multifamily for 2018
The multifamily market in the United States has yet to hit its peak and will continue to show positive movement. From the increase in concessions and the uptick in construction, the multifamily market will continue to be attractive to investors, particularly in the secondary markets. Absorption levels will continue to rise and the market has no signs of slowing down as 2017 comes to a close and as the new year begins.
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