“Balancing a complex and appealing building design with the cost to construct it, while maintaining the established budget, is like choreographing an elegant dance set to music that is finite in length, while still conveying the tale that’s being told.” That is according to Jocelyn Topolski, director of business development at Bernards. “While it’s not easy to do, it certainly can be done well with the right trained craftsman leading the effort.”
While talking to sources about multifamily design and demand drivers in celebration of GlobeSt.com’s 15th anniversary, sources agree that the product type has evolved drastically in terms of perception, demand and profitability.
Gary Goodman, SVP of acquisitions at Passco Cos. LLC, tells GlobeSt.com that “Throughout history, multifamily living did not traditionally compete with single family homes. Apartments were perceived as the first step for young adults, with the ultimate goal of buying a single family home of their own down the road.” Today, however, he notes that apartment living is the norm for many Americans, from Millennials to Baby Boomers, and in many cases renting is a choice as opposed to a necessity.
“Millennials have been the true driver behind this shift. Watching many of their parents lose their homes during the recession, many in this generation have simply lost interest in the risk of homeownership,” he says. “Further, the recession left many Millennials under-employed. As this generation continues to seek their ‘big break’ in the professional world, the flexibility of multifamily living, which allows for easy moves when needed, is very appealing. Finally, the amount of student debt that most young professionals have amassed continues to make purchasing a single family home out of reach for many.”
As a result of these changes, Goodman notes, “multifamily today has stepped up and evolved, and now truly competes with single family homes on every level.” In addition to offering the flexibility and freedom that today’s generation craves, he says, apartments today have also drastically updated in terms of quality.
“Amenities such as granite or quartz countertops, stainless steel appliances and hard wood floors have become the norm, as well as a plethora of luxury services (fitness centers, valet trash pickup, game rooms, concierge services, resort style pools and coffee bars) that allow renters to truly establish a sense of community within their rental homes.” In addition, he adds, the investment perception of multifamily product has also changed. “Today, this property type is viewed as the “golden child” of commercial real estate investing, based primarily on the fact that it not only held up during the recession, but demonstrated soaring values and rents.”
This perception remains true today, he says. “Transaction volume is on track to exceed $120 billion this year, compared to less than $20 billion in 2000. The appetite for multifamily investments continues to be enormous, and with the current trends, we don’t expect that to change in the near future.”
In recently talking with TruAmerica’s COO, Lynn Owen, about some surprising amenities that have the biggest band for the buck in value add deals, he says that while it might be surprising to some, but approximately 70% of renters are pet owners and amenities such as Bark Parks are a huge hit with renters. “We go a little further by adding agility courses, dog runs and even dog washing areas. We also find that adding an outdoor gym or re-purposing tennis courts into multi-purpose amenity areas with a resident courtyard and BBQ lounge are popular amenities,” he says.
Interior renovations are all about the attention to details, he says, and not getting caught up in over improving. “It is definitely an art form though. You have to find that balance between not over improving for your demographic, and giving enough of a ‘wow factor’ to gain the attention of the ever-growing discriminant renter.”
This article was originally published on GlobeSt.com.