Five Strategies for Killer Multifamily Rents
San Antonio had 4.5% rent growth in 2014, but it wasn’t proportionally spread across the city, according to experts at yesterday’s Bisnow San Antonio Multifamily Summit. These five types of properties are getting the lion’s share of increases.
1) Workforce housing
LYND CEO Mike Lynd—pictured with MSG Management’s Victor Andonie—says workforce (Class-B and –C) housing is getting the strongest rent growth in his portfolio, sometimes pushing rents $100 a month. It’s been under-rented for years, he says, floating around 85% to 90% occupancy. Now it’s over 96% occupied and getting stronger residents.
Many rent bumps are engineered through renovations, JLL managing director Scott Lamontagne (whom we snapped with Apartment Data Services’ Bruce McClenny) says. He says most organic rent growth is in the 2% range. Value-add is more like 4% to 5% increases, HFF senior managing director Sean Sorrell says.
3) Unique assets
Meanwhile, standout communities with something special are raising rents 6%, says Sean, here with Churchill Forge Properties’ Katherine Hinebaugh and Paul Resneck. Unique projects beyond the standard cookie-cutter assets are drawing a lot of interest. He recently worked on a community that had a mix of townhomes and flats. It targeted a wide range of demographics and snagged great demand and rent growth.
Our panelists (including ARA principal Pat Jones) agree that Downtown is picking up steam, and San Antonio is just at the beginning of a strong wave of urbanization. As Sean put it, San Antonio is getting a cool factor we never had, and for the first time, droves of students from UTSA and St. Mary’s are sticking around post-graduation. Mike says baseline suburban projects aren’t getting much rent growth, but Millennials are willing to pay for an urban lifestyle. Scott says some Downtown projects are projecting $2.20/SF rents—San Antonio is officially a $2 market.
5) Smaller units
Embrey EVP Robert Hunt says his team is building units in the 540 to 595 SF range, and they’re flying off the shelf. You can really raise the rents on those apartments (they’re the price point leaders in his portfolio) but still stay within the range residents are comfortable paying each month.