Trends in Multi-Family Housing
4 intriguing trends to track in the multifamily housing game
In just about any metro area in the U.S., investors, developers, and builders are scrambling to keep pace with the surging demand for multifamily housing, especially rental apartments.
An estimated 351,000 multifamily units were started in 2015, up nearly 14% over 2014 and more than double the 6.6% growth rate for total housing starts last year, according to the National Association of Home Builders.
Mass. Common areas in multifamily buildings, especially those charging higher rents, often look more like lobbies found in hotels.
#1: THE QUEST FOR THE URBAN LIFESTYLE
Multifamily products are attracting all adult cohorts, but their true targets seem to be Millennials and empty nesters. Stephanie McCleskey, Axiometrics’s VP of Research, notes that, from 2010 to 2013, 750,000 new renter households were formed whose heads were 55 to 64 years old.
We can call these people “comfort creatures”––renters by choice, mostly in their 30s, who want high-service, high-amenity living location and want to live near like-minded people. Industry observers say the common thread that connects these groups is the desire for a low-maintenance, urban––or at least walkable––experience, enhanced by amenities and technology that create a communal live-work-play nirvana.
Much of this activity is being fueled by renters who crave what insiders calls “the 20-minute bubble,” where everything they want or need is close by and doesn’t require going onto a highway.
Most of the multifamily that’s being built in the U.S. is rental, and much of it is in or near urban centers where both young and older renters and empty nesters are gravitating.
#2: SEEKING AFFORDABILITY, WHILE STILL HAVING LUXURY
Many renters may aspire to live in or close to downtown, but that lifestyle doesn’t come cheap. A significant percentage of prospective renters are in a financially fragile state, and their housing options are narrowing as more and more developers and investors slavishly pursue deep-pocket customers.
To attract these customers, high-end properties must offer such amenities as infinity pools and upgraded design features in common areas, such as $25-30/sf flooring.
#3: BATTLING IT OUT IN THE AMENITIES ARMS RACE
As apartments are shrinking, common areas are expanding and are being designed to meet the needs of tenants who want to gather socially or do work there. “Residents, in particular Millennials, use these spaces for socializing with other residents and guests, or as ad hoc living space,” says multifamily building pros.
Common areas are being equipped with the technology needed to facilitate these live-work interactions. USB ports, dependable WiFi, iCafes, and other Web-access features are now common practice. To withstand greater usage, common areas are being decked out with more durable furniture and carpeting.
THE LATEST AMENITIES
- Bike storage and repair
- Car-sharing service
- Child-care service
- Cooking classes
- Dry cleaning/laundry service
- Free WiFi
- Package delivery management
- Personal shopper
- Pet grooming
- Rock-climbing wall
- Rooftop terrace
- Spa/massage center
- Tech/business center
- Wine cellar
- Yoga/Aerobics/Wellness classes
Common spaces—especially in luxury buildings—are starting to resemble hotels and resorts in their look and feel, and in the services they provide. An apartment building that Balfour Beatty built in Charlotte, N.C., offers tenants cooking classes conducted by chef educators from Johnson and Wales University, which is conveniently located across the street.
Concierges who cater to tenants’ every whim are on call at some multifamily communities. The quality of a property’s amenities plays a huge role in the clientele it attracts and the rents it can fetch. “The common complaint about amenities is that they’re like your grandmother’s living room: they’re nice to look at, but nobody ever uses them,” quips Picerne’s Massie. “We prefer to install amenities that people actually use.”
But tenant demand for more and better amenities has launched an arms race among property owners. Dry cleaning services, lofts with office space, and private elevators are only some of the more esoteric amenities finding their way into multifamily dwellings.
Rooftop decks and terraces are now must-haves for mid- and high-rise buildings, says Wermers. The trappings of these terraces include comfy seating, sonic sound systems, big-screen TVs, kitchens with barbecue grilles and pizza ovens, and even cabanas.
One amenity that’s undergone significant transformation in recent years is the fitness center. No longer just a place to exercise, the fitness center has become the place where tenants gather and socialize. Classes for yoga, aerobics, cardio and strength training, and wellness in general are very much in vogue.
Bike-friendly amenities present new spatial and security problems for architects and contractors: where do you put them, and how do you keep them safe? There can even be regulatory concerns. A recent zoning change in bike-centric Washington, D.C., now requires one bike space for every three new residential units built. “That’s quite high compared to the national average,” says Silverman.
Pet-friendly buildings are also becoming de rigueur. Pet owners can account for anywhere from 20 to 90% of a building’s residents. At minimum, they expect their residential communities to offer animal grooming services and exclusive recreational areas for pets.
Another trend is dog spa – Encore SouthPark in Charlotte, has included a dog spa and one of their key features. The quality and number of amenities that a multifamily building offers can often determine its rentability. Some newer amenities that these properties are finding they can’t do without are bike rack stations and “pet spas,” where residents can groom and exercise their furry friends.
#4: GIVING TENANTS MORE CONTROL OVER TECHNOLOGY
Because technology can change so rapidly, Building Teams and building owners are struggling with how to deal with the next wave of innovations. For example, while a growing number of tenants might want Internet TV access, few property owners are ready to cut their buildings’ cords from cable or satellite delivery.
The industry is slowly moving toward giving tenants greater command over their environments—from entry doors to HVAC systems. The giant builder/developer Forest City has installed cloud-connected devices in apartment projects in Dallas and Washington, D.C. These devices allow tenants to monitor and regulate their lighting, heating, and cooling, says Mike Smith, Forest City’s VP of Technology Service.
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