After a year full of surprises that we did not expect, we already have high hopes for this year and are raring to go. 2020 took a toll on everybody, some more than others. The pandemic left many people unemployed, the stock market fluctuated wildly all year and all of us faced many challenges with the disruption of normal life. The multifamily investors are therefore now ready to explore the new opportunities that might come their way this year. Given below are some multifamily trends to watch for this year.
Increase in the demand for Multifamily Homes
Due to the global pandemic, the demand for rental units is likely to rise. People are choosing to relocate to smaller metro areas, the situation is driving them to sell their home and rent instead. While some are relocating, others are scoping out the suburbs. Many of them would want to rent out a property for at least some time before they commit to a long-term arrangement of home ownership which is increasing the demand for multifamily homes.
Suburbs over urban
The consequences of the pandemic have awoken the inclination to live in less populated areas in the folks. In comparison to the time they are going to take for commuting from one place to another with the amount of living space, they are choosing more space. Pandemic has become a reason for the mass evacuation of the folks from the Bay Area, Dallas-Fort Worth, and New York City to suburbs although the rent price rates have slowed in urban areas vs suburbs. Not to forget that this situation is temporary.
Renters seek privacy and dedicated spaces
Before making upgrades to a multifamily apartment, investors need to rethink the choice of amenities for the folks’, pre-pandemic vs now. According to a recent study from the online work marketplace Upwork, 41.8% of the U.S. working population continued to work remotely in December 2020. The same study found that 22% of the American workforce will be full-time remote in 2025, representing an 87% increase from pre-pandemic numbers. This reveals that dedicated spaces should remain a priority followed by private entrances with outdoor access to and from their apartment and in-unit amenities such as laundry service and high-speed Wi-Fi because that’s what the tenants seek nowadays.
The Urban Exodus might continue but the big cities will not die
This exodus has hit the multifamily market with a hammer blow. As long as the pandemic continues, the chances of people thinking of moving back to densely populated urban areas are minimal, however, for the folks who have always desired to live in cities like New York, Boston, and areas of Northern and Southern California, this very migration of people to the Sunbelt has opened up a lot of doors of opportunity.
Challenges Multifamily Investors could face
The pandemic will probably not be done by the end of this year. As a matter of fact, it may not be over and done with even by 2022. Multifamily investors will continue to brawl with challenges such as they have already been facing.
Social distancing will need to be well articulated when the development of new units is considered. Common areas will need to be generously spacious and individual units will need to be adequate. After months of isolation, renters would not want to co-operate without such upgrades.
Uncertainty in the economy might also have an impact on rent collection.
A year full of Hopes ahead
The fate of the multifamily investors will hinge largely on the overall economic recovery of the country.
The demand for rental units will definitely continue, and investors who focus on affordable cities may fare better than those who insist on sticking with proven metro hubs. It’ll be interesting to see how things play out as the nation battles its way back from the clutches of the pandemic and slowly, but surely attempts to heal.
Prashant Kumar, CCIM
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