Apartmentalize: Urbanites Are Changing Suburbia—and Upending Multifamily
Access to public transportation and walkability are top priorities for many recent escapees to the suburbs.
Rising rents in city centers and the aftermath of COVID-19 have been main contributors to the growing number of urbanites seeking residences outside of big cities. Unlike past migrations to the suburbs and smaller cities near major metropolises, however, the new émigrés do not plan to leave their urban lifestyle behind, said panelists at the first full day of the National Apartment Association‘s Apartmentalize conference in Atlanta.
Proximity to major cities and their economic and cultural hubs is a priority for many in this new class of suburbanite, many of whom desire to live much of their lives in those cities. “When we look at what happened during COVID, New York is a great example,” said Carol Enoch, CEO at real estate consultancy Enoch & Co. “A lot of those folks that were in those Class A high-rises said ‘You know what, I’m going to hop over a river and I’m going to go to New Jersey, and I’m going to go to Connecticut, I’m going to go close by so I can still experience the amenities when they come back, but I’m going to get more space, similar building amenities for a low price’ and that is a trend we’re continuing to see post-COVID.”
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While Enoch conceded that high rents in urban centers make sense, she lamented that city living within the city limits is becoming increasingly exclusive. “There is so much that’s great about that urban core of housing,” said Enoch. “In an ideal world you should be able to have multiple economic levels of folks living there.”
For the new urban-minded suburbanites, meanwhile, their tastes are dictating a rethinking of the traditional multifamily property. The new transplants value walkability in everything from taking their children to school to getting a cup of coffee. Proximity to public transportation is also, predictably, a top priority.
“You want to make sure that you’ve got some walkable amenities,” said Enoch. “Can you get groceries, can you get coffee, can you drive the kids to school easily or walk them or take them on their bikes?”
Life outside the city offers opportunities for more green space, something developers can lean into as they court prospective renters, said Enoch. “Work pods” or small coworking spaces have been a popular amenity in recent years, said Wende Marshburn Smith, senior vice president of operations at Bell Partners, who has noticed the trend gaining popularity. “We’ve seen that in suburban markets as well.” Also important to many renters, said Smith, are amenities aimed at pet owners.
A not-so-new trend
While COVID-19 spurred a more rapid movement away from city centers than anyone could have imagined, many of the projects now benefiting from this exodus have been planned for years. Nevertheless, the pandemic did drastically change multifamily dynamics in short order.
“There was a tendency to flee the urban market,” said Lynn Bora, citing the uncertainty the permeated the job market in the early days of the pandemic. “The urban market is coming back a bit,” she noted, though in many markets, urban rents haven’t climbed back to where they were pre-COVID-19. They have, however, been steadily increasing. “It’s been a long, slow process.”
Enoch noted that her firm was working with developers in what were then third-tier markets a decade ago. “We started looking at development and tertiary markets 10 years ago,” said Enoch, who said that some of these projects delivered around 2020, just as demand in those places spiked. There were other projects that didn’t go online immediately, leading to a flurry of unveilings. “We’ve got a glut of supply that’s temporary right now due to the pressure that built up due to construction delays during COVID.”
It can often be difficult to discern whether the city center is far too expensive for most renters, depressed by recent trends or both. Regardless, migration out of the cities may be balanced out by an increased interest in city living if and when more employees return to the office. “Hopefully that will help that urban core,” said Smith. However, there is no indication that offices will fill to pre-pandemic levels.
More realistic rivals to traditional multifamily rentals are single-family rentals, which Smith said is a definite “shadow market” that holds appeal for younger families. “Typically, we have our young professionals or our baby boomers or those who are downsizing” who are most interested in single-family rentals, said Smith. Meanwhile, build-to-rent properties are also increasingly the focus of both attention and investment, including from heavyweights Greystar and BlackRock.