NATIONAL: Are Renters By Choice Here to Stay?
Across the US, it’s not just Millennials who crave apartment living—it’s also Baby Boomers, which surprises DC-based National Multifamily Housing Council prez Doug Bibby. While DC, Boston, and big cities in Texas are some of the most active rental markets, Nashville is emerging as a new Mecca for younger residents, Doug says. In part, the trend reflects the resurgence of downtowns in cities like Philly, Dallas, and LA. Micro-units help make the downtown core affordable, especially for young people who care more about location, common amenities, and having the building entirely wired. Time will tell if this is a permanent trend or a temporary adjustment, he says.
But Arlington, Va.-based National Apartment Association CEO Doug Culkin thinks we have a good run ahead—at least through 2025. Nationally, 250,000 units are under development, far below the 350,000/year before the recession. “Even with all the new construction coming on, the last I saw was that we needed about 350,000 net new units a year, and we haven't even hit that mark,” he says. His only word of caution? Rents. They're projected to rise 3.5% this year. But salaries—especially for that critical Millennial deomgraphic—will only grow 2%. Doug says we risk making rents unaffordable for the key target audience.
CapitalOne SVP Mike Edelman tells us his firm is seeing an uptick in construction and permanent financing for rental developments in response to the renter-by-choice trend. The lender just jumped into California with a base in Newport Beach; other hot markets include Texas, where there's strong job growth; and the Big Apple, where Mike is based and is providing financing to mega developers like TF Cornerstone (Queens, particularly Long Island City, is a standout). His concern: in the future, rising construction costs in all US markets could hamper new development. Hear from all three experts—and plenty more—at the Bisnow Multifamily Annual Conference by registering here.