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4 Multifamily Development Trends to Watch in 2019

by Michelle N. on 12/19/2018 4:51:00 PM

Mixed-use development, lifestyle amenities, and the desire for more affordable housing will shape next year's development landscape.
By Dan Doyle

Changing demographics, shifting social values, and evolving development landscapes all continue to drive a surging, nationwide demand for multifamily housing. With empty-nesters looking to downsize, millennials staying single longer, and a general desire for a more convenient and social lifestyle, more and more “renter-by-choice” Americans are forgoing mortgages for lease agreements.

As demand for new housing units continues to drive the multifamily sector in 2019, developers are tasked with finding new ways to satisfy the growing need for apartments.

1. Expanded Project Portfolios to Meet Middle-Market Demand
As resident profiles expand, so too must the communities and units built to attract and accommodate them. The multifamily sector has been heavily weighted at the top end of the market in the past few years, but in 2019 the industry will experience an expansion of scope in order to serve a more diverse resident base, especially the middle market.

At The Beach Co., we’ve focused heavily on catering our product to a discerning and selective resident wanting luxury apartments. While demand for this product is still alive and well, we're looking to develop a more balanced portfolio of communities with a variety of price points.

In 2019, we’ll see a spike in demand for attainable rental options, and in fact, we’re already seeing demand for attainable housing in all our active markets today.

Through increased segmentation, developers are realizing that affordable housing options can't be a one-size-fits-all approach. While some developers in the most competitive markets—where space is at a premium—offer attainable housing in the form of micro-units, this approach is less popular in smaller markets.

Moreover, the tiny-apartment trend will be unable to satisfy the growing middle-market demand. In the Southeast, suburban areas present an opportunity to offer larger floor plans, which is key in targeting middle-market customers. To maintain a competitive edge next year, multifamily developers must adopt targeted solutions that appeal to each potential market, which includes paying more attention to attainable and more affordable housing solutions.

2. Increased Customization
The key to a successful lease-up is to differentiate your product to appeal to the demands of your market’s unique resident base. Developers are achieving new levels of project customization through enhanced research and development practices. Demographic research is a good starting point, but a deeper understanding of a potential site’s history, economy, industry, and culture all contribute to meaningful customization.

For example, knowledge of emerging industry in a region can be the impetus for new development projects. This was the case with The Beach Co.’s Summer Wind project, currently under construction in Dorchester County, S.C., which was conceptualized in response to a number of major international companies, including Volvo, Bosch, Boeing, and Mercedes-Benz, opening facilities in the area.

Conducting thorough market research before embarking on a new project is essential and goes beyond informed marketing efforts to heavily influence property and unit design.
Additionally, with the deluge of customer data now available, developers are better equipped than ever to ascertain the needs and desires of future residents. Conducting thorough market research before embarking on a new project is essential and goes beyond informed marketing efforts to heavily influence property and unit design.

A resident-centric application of customization can be seen in the continued evolution of amenity offerings. While the amenity war in the multifamily sector has been raging for the past few years, 2019 will usher in a wave of technology-focused amenity offerings like smart access-control systems and automated package-pickup services.

3. Shared Amenity Space
In recent years, mixed-use developments have thrived as a result of evolving lifestyle preferences among today’s renters. Whether in an urban-core setting or a suburban town-center design, young and old generations alike are seeking more-active, -social, and -walkable lifestyles with short commutes and proximity to leisure activities.

In response, mixed-use developments offer an artful blend of residential, office, and retail spaces. Consequently, prized amenities formerly only available to multifamily tenants are now available to nonresidents. Proximity and exposure to the greater community has led a growing number of owners to allow nonresidents to purchase memberships to common-area amenities such as fitness centers. This alternative finance stream marks a growing evolution in the multifamily business model and provides for greater utilization of a community’s fixed assets.

Additionally, employees of corporate tenants in mixed-use developments typically have access to the residential amenities as part of their benefits package. This will be the case with The Jasper, which my firm is currently building in historic downtown Charleston, S.C. Slated for completion in 2020, the luxury, 12-story, mixed-use building will include 219 luxury multifamily units, 75,000 square feet of Class A office space, and 25,000 square feet of first-floor retail. The mixed-use amenities feature high-end on-site dining and shopping; a rooftop pool and garden with a sundeck and outdoor kitchen; a commercial-quality fitness center; a clubroom with lounge and demonstration kitchen; and private wine lockers.

4. Urban-Core Workarounds
Today’s renter still wants to live downtown but is being priced out of the urban market. Construction costs remain high, so developers must look to alternative solutions like adaptive reuse of existing buildings to help solve some of the cost issues in the urban core.

In these markets, retrofitting an existing building may be more attractive, as the structure costs are already in place, so multifamily developers can deliver a product just as nice as a new community with a lower cost basis, resulting in a lower rent for the resident. Adaptive-reuse solutions will likely offer a slimmed-down, lifestyle-driven amenity package, which may include services such as refrigerated lockers for home grocery delivery or customer-driven parcel centers catering to online shoppers.

While we’re seeing a push for attainable solutions from urban-core renters, most cities have offered few incentives for developers to build affordable multifamily product in the past. In recent years, we’ve witnessed some cities doing away with or significantly reducing the number of required parking spaces in new developments by incentivizing developers and residents to promote and use alternative modes of transportation, such as ride sharing or public transit.

In 2019, we’ll see more municipalities putting programs in place to assist with affordable housing development, with some creating mandates that require a certain amount of affordable housing. To really make a project attractive to developers and local governments, I predict we’ll see more incentives for developers to make projects affordable in the form of subsidies through tax abatements, tax increment financing districts, or other forms of public–private partnerships.

Today more than ever, it’s important for developers to form partnerships with local municipalities in active markets to better understand the needs of the city and its residents.

Read more at MFE




Archives

Preparing for the 2019 Budget? Help Prepare with These 5 Tips!

by Michelle N. on 9/27/2018 2:37:00 PM

As a residential property manager, you’re likely already gearing up for the 2019 budget season. As busy as property managers are with the many hats they wear — marketing and sales, screening prospective residents, assisting with all manner of residents requests, and more — most understand that putting together a solid budget is critical for financial performance all year long.

A budget tells you where you are and where you’re going, and it helps you measure your progress along the way. It provides an organized and easily understood look at money coming in and going out for anyone who might need the information, including your staff, community investors, and financial professionals. It’s also an invaluable tool for you in assessing how your community is performing, identifying any fat to be trimmed, and adapting as situations change.

As you prepare your 2019 budget, take a look at the tips below to help make the process as painless as possible.

Review industry data
Visit the library, use an online database, or search online to review standard income, expenditures, profit margins, and other metrics for your industry. You can find lots of free information simply by searching online for various keywords, and you can also find annual reports from market research firms that give away some information for free and include others for a fee.

Generate methods for increasing revenue
If your community isn’t at full occupancy, create a marketing, sales, and communications plan before working on your budget. Does your website need work? Should you be focusing more on generating and cultivating leads? If marketing isn’t your primary area of expertise, consider working with a local marketing firm or a national company specializing in property management for ideas.

Put together your marketing plan first so you can include funding in the budget to cover any new or existing initiatives. Also, spend time thinking about whether your pricing is on target. Are rents where they should be based on market averages, demand, and supply? Should you consider additional fees for services such as using the fitness center?

Consider cost-cutting measures
What can be trimmed from last year’s budget? Are you overstaffed for your current occupancy? Are there areas in which you know you’re spending too much? Spend time reviewing budgets from the past several years and considering your unique situation to determine if any areas can be cut.

Review your tax situation
Prior to working on the budget, sit down with your tax professional for an update on any changes in the local, state, and federal tax codes that may affect you. Plan accordingly for any additional expenses that may result.

Plan for capital expenditures
Sit down with your maintenance staff — and maybe even a hand-picked panel of residents — to plan for needed capital expenditures. There will always be something that can be fixed or upgraded, so you’ll need to prioritize. What has to be done in 2019 and what can be put off for future years’ budgets? Consider your community’s overall financial situation, but also consider the marketing impact and curb appeal of certain upgrades over others.

No property manager looks forward to creating a budget. However, most also understand that taking time to put together an effective budget is critical to the ongoing financial and operational performance of a community. Spending some time planning by reviewing industry information, thinking about how to increase revenue, reviewing spending and taxes, and negotiating with vendors can help make the task a little less daunting.


Source
http://www.investopedia.com/articles/pf/08/small-business-budget.asp
http://smallbusiness.chron.com/steps-preparing-operating-budget-61547.html
http://www.personalfinance.duke.edu/manage-your-finances/budget/overview

 




Archives

Multifamily Purchasing: Standardization and Compliance Class

by Michelle N. on 7/9/2018 12:49:00 PM



Multifamily Purchasing: Standardization and Compliance Class
Wednesday, July 18, 2018 1:00 PM - 4:00 PM EST


Want to better understand how to more effectively spend your allotted budget? This course will teach you how to reduce purchasing and overhead costs so you can stay within your budget!

In this class, you will be able to project savings and learn about:
 

> Supplier management

> In-house vs group purchasing

> Healthy purchasing

> Standardization

> Spend management and budgeting

> Online ordering and reporting

> Benchmarking

> Improving purchasing


Register soon!

Click here for flyer
 

Pricing

 

Register Here!

 
 




Archives

Report: These Trends Are Radically Disrupting Multifamily Housing

by Michelle N. on 3/19/2018 11:43:00 PM

Renters' desire for personalization and less stress, integration of AI and IoT into apartment infrastructure, concentration of 35+ age groups will drive multifamily in next 12 years. By Lauren Shanesy

The multifamily industry is on the brink of a design revolution, and it’s disrupt or be disrupted.

“If you look at other industries in real estate, [such as] office, hospitality, retail—and you’re starting to see restaurants—they’ve all been disrupted,” says National Multifamily Housing Council (NMHC) vice president of industry technology initiatives Rick Haughey, in the report. “Why should we think we’re exempt from this disruption? If you’re not thinking about it and talking about it, you’re at risk of being displaced.”

The NMHC's Disruption Report, released earlier this year, examines the ways demographic shifts and technological advances are affecting housing and what it will mean for apartments of the future.

A number of trends stand out as game changers that designers, developers, and managers should pay attention to if they want to stay ahead of the curve. Here are some of the report’s key takeaways:

Technology
Advances in the smart-home space will cause technology to become part of the core infrastructure of apartment communities.

By 2020, technology research firm Gartner predicts, 26 billion devices will be connected through the cloud-based Internet of Things (IoT).
Donald Davidoff, president of D2 Demand Solutions, a multifamily sales consultancy, calls artificial intelligence (AI) “the single biggest change that will affect us” and likens the impact on white-collar workers to what happened to blue-collar workers during the Industrial Revolution. Read more about that here. A full 65% of U.S. adults say that within the next 20 years, most deliveries in cities definitely will (12%) or probably will (53%) be made by robots or drones instead of humans.

Marketplace
Consumers are now accustomed to on-demand delivery of goods and services, placing a greater emphasis on the importance of lifestyle in communities.

Nearly two-thirds (63%) of respondents to the NMHC 2018 Consumer Housing Insights Survey said their lives are so hectic that they look for ways to make things easier.
Ninety percent of the U.S. population will connect to the grid via smartphones by 2023, according to experts. Seventy-two percent of consumers and 89% of business buyers expect companies to understand their unique needs and expectations, according to the 2017 State of the Connected Customer survey by Salesforce.com.

Demographics
As demographics shift, developers will have to serve a greater variety of households and housing needs.

The U.S. population is getting older and more diverse, and the apartment industry should be studying the expanding bubble of aging Americans—65% will be 35 or older in 2030—and immigration trends instead of millennials. The 73 million baby boomers in the United States accounted for 58.6% of the net increase in renter households between 2006 and 2016, according to NMHC tabulations of U.S. Census data. By 2024, immigration will surpass internal population growth for the first time, according to Hoyt Advisory Services research. Immigrant families are more likely to rent than native-born Americans, and their household sizes tend to include four or more people.

Employment
Mobile technology and wireless Internet are changing where and how people work, with more employees teleworking than ever.

Forty-three percent of workers in America do some telecommuting, according to Gallup—and more would if they could. Read more about how to design for teleworking residents here. In the past decade, there’s been a 50% jump in offline alternative work (independent contractors, on-call workers, temps, and the like). Forty percent of respondents to the 2018 Consumer Housing Insights Survey say they plan to telecommute more in the future. Small Business Labs found that more than 1 million people sought an enhanced social experience, networking opportunities, community support, and learning opportunities in coworking spaces in 2017.

Transportation
A migration back to urban, walkable areas, along with services like Uber, are changing the way residents commute. They now rely on personal vehicles less and less, leaving apartment communities to figure out how to adapt to a fluctuation in parking needs going forward.

America has far more parking spaces than it needs—three to eight per vehicle, according to the University of California.The ride-share industry is booming; Goldman Sachs predicts it will balloon to $285 billion by 2030. As the unpaving of paradise accelerates, as much as 75 billion square feet of parking space stands to be eliminated, leaving open the question of what will happen to that space in the future.

Health
Residents are focusing more on physical and mental health and are looking for apartments with spaces that promote wellness.

Ninety-two percent of renters in the NMHC 2018 Consumer Housing Insights Survey said they wish they had an environment that would promote better sleep. In a 2017 survey by the American Psychological Association, nearly nine out of 10 people (86 percent) who say they constantly or often check their email, texts, and social media accounts report higher stress levels. Providing a retreat starts with sound attenuation, as 91% of renters say soundproof walls are important to them.

Resource: MFE




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