Thanks to many factors, new multifamily construction is expected to remain stable in 2020.
While the full impact of the coronavirus has yet to be fully realized, a housing shortage and demographic considerations indicate demand for high density dwellings for the foreseeable future.
If you’re considering investing in the market, or are already involved, understanding the forces moving the market will be paramount to your success.
Here is a short glimpse of the top 7 trends in multifamily construction.
The tech world has started to make inroads in the real estate market, by offering amenities that appeal to early adopters and the tech savvy.
With this in mind, developers and operators who prioritize technology can create spaces that are highly in demand.
This includes spaces for rideshare pick-ups or drop offs, electric car charging stations, and incorporating disruptive technology into building plans.
Commercial real estate companies are already using machine-assisted learning for analytical purposes, but the train does not stop there.
Contractors, engineers/architects, and developers alike can put artificial intelligence to use through building management, design, and even organization.
When designing spaces, builders should keep in mind that spaces that either already are “smart homes” or can be fitted to be so is the way of the future.
Artificial intelligence can also be used as a powerful marketing tool to get the best renters, as more tech-savvy individuals look to move into units already outfitted for their needs.
Moreover, this technology can also have important impacts on security, building access, and even efficiency in day to day life.
Thanks to Amazon and its competitors, warehouses and shipping hubs are snapping up large pieces of multifamily real estate near both major and lesser-known cities.
In order for companies to meet the increased shipping demands of online shoppers, they need to be located close to large populations.
Logistically speaking, this is convenient for them, but not so convenient for other developers.
Aptly named the Amazon effect, this phenomenon is something to keep an eye on, especially as it relates to acquiring new property.
Development costs may be prohibitive in these areas, or incredibly lucrative, depending on the market.
As climate change becomes an increasingly hot topic, many millennials are looking to move into multi-family units that reduce their carbon footprint.
Architects and engineers can design LEED-certified buildings, contractors can employ sustainable practices and source local products, and owners can request spaces that meet these desires.
Forbes talks about a phenomenon called “co-living,” a model many younger people navigate towards for both environmental and economic reasons.
These generations are combining technology and multifamily living spaces in order to create affordable space inside high population areas.
Owners and developers alike would be doing themselves a favor to stay on top of these buzzwords and look for effective ways to incorporate sustainability into their branding.
In many cities, affordable housing is a thing of the past. Younger generations and boomers alike are clamoring for smaller, more affordable units.
Multifamily residences are uniquely situated to fill this void. The rise in housing costs prices many people out of single family homes.
Developers can maximize on this trend by designing multi-functional spaces within each unit, as many individuals are now seeking smaller living spaces that are located closer to urban centers.
This reduces commute time as well as places them in a convenient location.
While on its surface this appears to attract mostly millennials, the truth is that many empty nesters, boomers who are downsizing, and others seeking a more urban lifestyle are also migrating towards urban-based multifamily units that provide amenities, are technology-savvy, and convenient for their daily lives.
Suburbs and smaller cities are also benefiting from this trend, absorbing the population swell from larger cities.
Not everything in the MultiFamily construction industry is looking up, unfortunately.
Thanks to trade tariffs, building material supply chain disruptions and a dire shortage of qualified labor, many contractors are struggling to deliver completed projects on time and under budget.
Qualified labor left the construction industry and pursued other careers after the financial crisis of 2008, and those who have filled the void often lack the experience needed to deliver stellar products.
One significant draw towards MultiFamily housing are the amenities provided.
As people flock towards urban centers, they are increasingly willing to trade the privacy offered by single family homes for high-quality amenities available to those who live in communities.
These include gyms, recreational facilities, recycling, fiber internet, and even pet-focused amenities.
Capitalizing on this is increasingly important to remain competitive in the market.