It is no secret that multifamily housing demand has been on the rise over the past few years and will continue to rise throughout this year. But, according to a Marcus & Millichap report, the demand is not the only thing that has been trending in multifamily. The industry is also seeing different trends in the way multifamily is constructed, and in creating more buildings that utilize technology and the internet of things —or as some say, “smart buildings.”
Whether you’re a real estate professional trying to stay current with trends or have a different role in the industry, here are some trends that commercial real estate brokers are calling out as must-watch.
1. The Internet of Things
Coldwell Banker Commercial Atlantic is pointing to the trend of the internet of things as “changing the landscape” of multifamily. The internet of things is allowing for many devices and appliances within the home to be connected and communicate with each other.
Not only does this interconnectivity allow for more convenience for the resident, but it can also allow for more streamlined and efficient buildings, which will help to reduce costs not only for the tenant but can also help to reduce costs for the building owner as well. For more on this topic read 3 Things Smart Homes Can Teach Us About CRE.
2. Suburban Growth
Urban downtown living has risen in popularity especially with millennials, but as CBRE points out in their 2017 Multifamily Outlook, suburban living (or as they refer to it the “quiet giants”) is having a larger influx of population than urban markets are.
According to the 2014 American Community Survey of the U.S. Census, 2.8 million people moved from the suburbs to urban areas — but in contrast, 4.6 million moved from urban centers to suburbs. This was seen across all demographics, not just certain age groups or professions.
One of the major driving factors of this is the rising costs of urban downtown living, but people are still looking to have the same amenities in the suburbs. This is creating more downtown-like suburban areas that offer great public transportation, as well as shopping and retail nearby.
3. Supply Challenge
CBRE also points out in their 2017 Multifamily Outlook, that supply has been outpacing demand, which they believe will continue to be the case for this year as well as 2018. As completions are at an all-time high and supply is higher than demand, it is seeing markets being effected by reducing rent growth as well as increasing vacancy numbers.
CBRE is predicting rent growth to reduce to 1.2% and vacancy to increase to 5.5%. The biggest impact of this is being seen in urban infill markets where developers are delivering the most units currently. However, in contrast and to tie into the number 2 trend, suburban markets do not see as large of an effect when it comes to these supply challenges. Since suburban units will not typically be competing with high end and newer development, CBRE is expecting these markets to perform well in 2017.
What trends are you seeing?
Seeing some different trends in your market? Let us know in the comments or connect with us to continue the conversation.