NATIONAL: Are Renters By Choice Here to Stay?
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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.
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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.
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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.