Multifamily properties had an impressive year despite being in the late stages of an extended economic cycle; however, there are concerns as we look forward towards 2020 and beyond. Economic growth has resulted in wage growth but a lack of affordable housing for a growing cohort of middle-income households has brought about affordability concerns. Investors and developers have positioned themselves by shifting away from Class A units and primary markets.
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Dominic Toth
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Propelled by a strong economy, demand for multifamily units has been healthy for much of the current economic cycle. Over the past ten years, nearly 3 million new apartment units have filled, dropping vacancy rates to a cycle low – driving steady rent growth. Overall, the multifamily sector has performed consistently well for several years running. While signals of a minor economic slowdown have surfaced, growth in the multifamily market should, nonetheless, remain healthy throughout 2020.
Read MoreSluggish wage growth and rising rents in many cities have made it unattainable to live alone. Enter communal living, or co-living, which brings together people in a shared space. Typically, sleeping quarters are private and the kitchen and living are for social gatherings. In addition, these living arrangements typically include a package of amenities such as cleaning services, utilities, and subscription services.
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With technology constantly at our beck and call, on-demand services have become the norm as renters want the most convenient services in the amenities game. Offering smart-home technology and customized fitness centers are the new ways developers can capture residents' attention. Multifamily developers and investors need to be mindful of the overarching trends that are impacting residents' life and apply them to the building and units. While amenities are nice, some developers have opted for a more all-inclusive provider that facilitates resident services such as laundry, cleaning, food delivery, pet care, and more.
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February 21, 2020
Short-term rentals and co-living are continuing to gain popularity, growing far beyond their origins as niche and need-based alternatives to traditional housing options. All the while, the multi-family sector is putting up strong numbers and shows no signs of slowing down.
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