Too much of a good thing is, well, a good thing. But as we head into Q2, too much multifamily product could result in three market corrections.
1) Absorption
Henry S. Miller Brokerage multifamily investments division EVP Lew Wood (with HSM’s Sam Swanson and Sam Kartalis at a recent HSM open house) says while the market has positive absorption, increasing rents, and projected market improvements, he would caution Class-A players to carefully understand their markets. With so much new product hitting here (10,000-plus units), we could see a bit of rent growth cooling as occupancies drop, slowing down the market, Lew tells us.
2) Demographic changes
There are new demographics emerging in the multifamily market: senior couples and single, active adults who tend to be upscale renters by choice, he says. As a first-wave Baby Boomer, Lew says he and his wife are looking for a new, streamlined living environment after 35 years of home ownership. Desired amenities: a location close to everything (think grocers, restaurants, dry cleaners, drugstores, and healthcare). Pictured is not Lew, but happy seniors because there’s no more yard to mow.
3) Population growth
When Lew moved to the Metroplex in 1976, the population was at 2.5 million. Since then, it’s grown to 4.3 million. This kind of growth is unprecedented and should continue, Lew says. Texas is the center of the country and is the bulls-eye for many companies wanting to relocate and take advantage of positive job numbers, low housing prices, and no state income taxes.
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