“In the past, the relationship between property ownership and residents was more one-dimensional; you leased a unit and your work was done.” That is according to Darcy Miramontes, EVP of JLL capital markets, multifamily.Nowadays, she says, residents expect more in terms of the services and the lifestyle that a community offers.
“Square footage is not as important as amenities, allowing projects with an appealing lifestyle to charge more for smaller units,” notes Miramontes. “Residents today are looking for amenities like pet services (including shared community pets), package delivery rooms, community and collaborative spaces, bike rental and repair shops, rooftop decks, smaller and smarter appliances, and an emphasis on storage space.”
Other factors that make a multifamily property desirable are also changing, she adds. “Modern renters are interested in transit-oriented and walkable communities and appreciate green measures that developers and property managers are implementing such as drought-resistant landscaping, energy-efficient appliances, and thermal-efficient windows.”
Malcolm Davies, a principal at George Smith Partners, who has been involved in the development and financing of more than 6,000 multifamily units over the past 15 years says that there has certainly been a variety of changes to the asset class. “Thinking about how the design standards have changed—it is mind boggling. In contrast to today's luxury rentals, older properties that were built in the 1960's and 1970's were primarily designed as two-bedroom apartments with a communal-type bathroom. These units were very basic, and featured galley kitchens, which have now been completely done away with through new design, and thorough renovations,” he says.
“We are currently in the midst of a multifamily boom, with the market at a level that has not previously been seen,” Davies adds. “This is in stark contrast to the market a decade ago, when condo developers and converters were advertising, 'Why rent, when you can buy,' as a slogan for the American Dream. This trend transformed renters into condo owners, and unfortunately we all saw how that played out on a larger spectrum.”
According to Davies, today's younger generations are asking, “Why buy, when you can rent?” Renting is particularly attractive today with all the amenities that come with rental properties, he says, “and the fact that there is no real long term contract (at least not over 12 months). With that said, it does pose the question – Will this generation be renters forever?”
Ultimately, Davies says, “what we have seen is the millennial (and, presumably younger generations) are settling down much later in life and with that comes a general delay in household formations. We have likely seen a cataclysmic shift in the population percentage of Americans that are renters, simply because these delays really do have people saying, 'Why buy, when you can rent!' and 'If I'm not ready to settle down with a spouse, why should I settle down with my housing?' This bodes very well for the amount of multifamily units being delivered right now.”
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
