Building industry consultant and PB columnist John Burns believes multifamily housing is about to break out of the doldrums afflicting that sector for the last decade. "Due to changing demographics, and a multitude of psychographic trends, there will be a world of opportunity for multifamily builders over the next few years," Burns says.
What's driving the change?
Apartment builders should continue to identify markets where job growth and population growth are strong, Burns says, and take a look at some emerging markets that have been off the multifamily housing radar screen in recent years.
"Luxury apartment demand will continue strong," Burns says. "But expect to see an increase in young renter demand in all markets. These renters can't afford the luxury apartments many builders have produced recently, and they don't want the apartments built in the 1980s." Primary research is needed in many markets to understand the needs of this market sector, Burns warns.
Luxury condos will be most successful in vibrant urban markets, where house prices are high, Burns postulates. "With the right location, the amenities that attract buyers will all be right there, at no cost to the builder. Even a health club may not be needed, if there's one already located nearby."
To understand this growing market, Burns suggests builders visit Manhattan; Washington, D.C.; Miami, Fla.; or Honolulu, Hawaii.
The chart shows Burns list of emerging markets with the potential to support multifamily in the future.