NAREE Report: Apartments Needed to Meet Demand
With Gen Z looming behind the huge Millennial population, millions more apartments are needed over the next decade to meet a growing need.
Apartment demand remains strong, and that is unlikely to change anytime soon, according to Caitlin Walter. Speaking at the National Association of Real Estate Editors conference in Austin, the National Multifamily Housing Council senior director of research pointed to a need for 4.6 million more apartments by 2030 to keep up with demand.
Perhaps not surprisingly, she attributed that demand primarily to Millennials, who along with immigrants are so hungry for apartments that vacancy rates remain at a historic low—contributing to the healthy rent growth that has resulted in an affordability problem.
READ ALSO: Counselors Unveil Top 10 Issues for 2019
And while Millennials are starting to marry, have children and buy houses in the suburbs, the next generation will more than take their place, according to Clay Grubb, CEO at Grubb Properties. He noted that there are currently more 12 year olds than 28 year olds, making Generation Z the group to watch. “The next 20 years are strong,” he declared.
Rising Challenges: Financing and Regulations
Indeed, the economic cycle continues a run that next month makes it the longest in history, and with multifamily more resilient than other real estate sectors, it is less likely to be impacted by a downturn when it does come. But it is growing harder to finance development projects, according to fellow speaker Don Wilkerson, 2019 president of the Institute of Real Estate Management and president & CEO of Gaston and Wilkerson Management Group. “I’m concerned the financing industry thinks we’re at the end of the cycle,” he observed.
At the same time, other dynamics are making multifamily development easier, Walter noted. For instance, changes in zoning are allowing for more density—which doesn’t only mean more high-rises but also more duplexes and fourplexes. “The government is taking a more thoughtful role in zoning,” she observed, although Grubb expressed concern that government regulations need to be more transparent and specific so that developers have the time they need to anticipate and address requests for change, and Wilkerson noted that government regulations often get in the way of what the private sector can do.