As we enter Q2, 2022, it’s important to reflect on the data, anecdotes, and overall trends that have recently emerged in the multi-family property space. Whether you’re a current owner or potential investor, reflecting on how trends like technology, rent hikes, and, of course, the global COVID-19 pandemic have impacted the industry is essential. So, let’s dive into some of the trends we're now seeing in the hottest multi-family markets across the country:
1. Multi-Family Buildings Striving for Sustainability
Tenants of multi-family and single-unit households alike are more concerned than ever about sustainable living. In fact, more than three-quarters of Americans want to learn how to live more sustainably.It’s important to note that younger residents are most likely to gravitate toward environmentally-friendly features, so the impact of this trend may depend on your market’s demographics. For example, cities like Denver, Colorado, have a large Millennial population while nearby Colorado Springs boasts one of the nation’s oldest populations. So, in-depth research and understanding will be critical in properly applying this trend.Suggested reading: Why Are Millennials Choosing to Rent Versus Buy?, 3 Reasons Baby Boomers Will Rent Versus BuyTo promote green living, a growing number of older buildings are now being retrofitted or redesigned in order to integrate environmentally-friendly features. In other words, if your resident needs a new fridge, perhaps consider an eco-friendly one.It’s also important to note that if your property is less than green, there’s no need to worry. Residents are now considering sustainability in a wider sense. Gestures as small as recycling services or energy-efficient lightbulbs are also in demand.If you’re interested in the new-build scene, many small multi-family complexes are now being built with environmental impact at the center of their design. In these cutting-edge properties, every unit will have some kind of environmentally friendly feature. Hello, Millennial residents!Overall, whether your portfolio is primarily older multi-family units or you’re in the market for that first property, sustainability seems to be a safe investment.Suggested Listening: Setting Your Investment Goals
2. Work-from-Home Support
Of course, the COVID-19 pandemic altered the small multi-family space via the work-from-home boom. Residents have been spending more time at home than ever before, which has helped clarify their unique wants and needs.The reality is, that while many businesses are eager to welcome employees back to the office, the transition will most likely be gradual. For other professionals, working from home is a permanent reality. So, depending on your residents and neighborhood class, tailoring the property for remote work could be beneficial. Owners of small multi-family properties could consider functional communal spaces, cutting-edge technology capabilities, and even built-in desks for an edge.
3. Curb Appeal in Multi-Family Housing
These days, even the smallest multi-family units are built with curb appeal in mind. Amid nationwide lockdowns and the rise of remote work, residents understand that the exterior of their space is just as important as the interior.Long-term renters, in particular, want to live somewhere that they are proud of and that feels like home. That’s right - just a little landscaping could yield impressive returns.Suggested Listening: How To Find A Great Resident and Keep Them Long-Term“Improving the curb appeal of your multifamily property makes a lasting impact on potential buyers and renters. A positive first impression typically translates to increased property value and higher rentals. Techniques like putting on a coat of paint and installing stylish fences provide the most bang for your buck,” says Joshua Blackburn of Evolving Home.
4. Rent Increases
It’s no secret that rents for multi-family housing units in the United States have steadily increased - that’s part of why it’s an ideal time to be a real estate investor. Certain states have seen hikes as high as 34%, but almost all investment markets are trending upward.Further rent hikes are anticipated as a result of inflation, but the situation has been exacerbated by a scarcity of accessible units throughout the nation. While rent-control legislation remains a hot topic, it is not yet a concern for most states, including some of the hottest real estate investment markets.
5. Construction Booms
In the same vein, multi-family property construction increased by nearly 14% in early 2022, indicating an anticipated market shift toward rentals. As much of society returns to normalcy, now is the time to invest in multi-family. Between rising rates and persistent demand, this increased supply could mean exceptionally high returns.
6. Virtual Tours and Self-Guided Showings
As COVID-19 restricted human-to-human contact, the ways in which we engage with one another were fundamentally changed. Fortunately, we now have technology that allows real estate investors to market, lease, and monitor their investments virtually.Even before COVID-19, there was significant interest in leveraging virtual tours for unit viewings and self-guided tours utilizing property management applications and software.In fact, according to one study, a sizable 17% of residents want to see a property without the property manager present. So, moving forward, leasing brokers and property managers will need to embrace these new virtual tour techniques. Virtual tours can help potential residents determine the property's look, feel, and accessibility, all from the comfort of their own couch. As taking a virtual tour requires less time and energy than a traditional one, it significantly expands the pool of residents who may express interest in each property.In other words, the best time to get on board with real estate-related technology was five years ago. The second-best time is now!
7. Luxury Amenities
As COVID-19 compelled many multi-family owners to close common spaces and non-essential facilities, residents are increasingly expecting luxury amenities, appliances, and finishes to compensate.If your multi-family property isn’t outfitted with a gym and sauna, though, don’t worry. Less obvious amenities, like a more established sense of community and phone booths or small conference rooms, will also fit the bill.A simple solution for any multi-family owner is to consider neighborhood class and add upgraded amenities accordingly. For example, quartz countertops will make a D-class property shine while a golf simulator would be much more at home in an A-class property.Suggested reading: 6 Factors to Consider When Choosing a Neighborhood to Invest In
Final Thoughts on Multi-Family Trends
Whether you choose to put an Olympic-sized swimming pool in your current property or grow your portfolio to take advantage of those sizable rent increases, understanding and reflecting on emerging trends in the multi-family space is essential. This kind of knowledge can aid in your investment strategy, establish you as a thought leader, and, at the end of the day, help you best serve residents.Now, all that’s left to do is put this newfound knowledge on trends to good use. Happy investing!
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