If any property type has been in the catbird seat recently, it’s multifamily (and industrial, but that’s another story for another website). And that’s likely to continue in this new year, thanks to a combination of factors. Among them are continued strong fundamentals (including stabilizing rent growth), a shortage of housing (especially market rate and affordable housing), availability of capital and a resultant healthy appetite among investors.
Also contributing to the strong prospects is an evolution that has been advanced by the pandemic. Faced by unprecedented challenges, including limitations on in-person pretty much everything, apartment owners and operators have leapt into an array of technologies that have enhanced availability, accessibility, flexibility and safety—the likes of self-guided tours, smart locks, automated package rooms, online service requests and other innovations. Expect further advances in the coming year as software developers and apartment operators both delve deeper into new capabilities and devise additional uses for existing technologies that improve marketing, operations and conveniences.
Other improvements are also taking place, as Diana Mosher details in our 2022 outlook, “Apartment Investors, Operators Expect a Great Year. Here’s Why.” The likelihood of continued at least partial work-from-home is driving not just a shift in amenities to incorporate workspaces and Zoom rooms but greater emphasis on healthy buildings. In fact, pursuit of WELL Building certification, which first caught on for offices, is becoming more widespread for apartments, including improved HVAC and filtration systems as well as more outdoor spaces such as rooftop gardens, balconies and terraces. That is sitting well with residents and prospects, who are increasingly considering environmental certifications as a differentiator.
Energy conservation is impacting construction materials, as well. The huge looming shortfall in apartments is resulting in demand for more units, and prefabricated and modular products will help to fill the gap. Architects are designing them to incorporate energy-saving and healthy-building features, expanding the availability of such benefits through a wider range of price points.
The right combination of fundamentals and demand is setting the stage for further industry growth. Exploration of advantageous improvements can only make it stronger.