Navigating the Shifting Tides in Multifamily Development 

Insights from NMHC’s Annual Meeting

The multifamily housing sector is at the forefront of change, responding to dynamic trends and navigating a complex landscape. Recent insights gathered from the National Multifamily Housing Council (NMHC) Annual Meeting shed light on the current state and future opportunities in multifamily housing. 

Crafting Region-Specific Strategies Amid Financial Challenges in Multifamily Housing 

As developers in multifamily housing grapple with financial hurdles and a prolonged period of elevated construction pricing, increased labor costs, and peak effective Federal Funds interest rates, they continue to explore new paths forward.

Some developers are expanding their geographic focus, others are exploring new types of housing, and alternative construction types. Bohler has become even more important as a local consultant with boots on the ground as our clients visit new markets.

—Andrew Finkelstein, Business Development Manager

However, while some regions of the country face downward pressure on rent due to new deliveries from the post-Covid construction boom, other submarkets have a significant shortage of available housing – which creates a compelling case for multi-housing developers to continue to identify new opportunities. In the current economic climate, developers are seeking 3-story walk-ups surface-parked apartments, and cottage-style “build-to-rent” developments located outside of secondary and tertiary cities. Many developers are working through the analysis of conversions of existing non-residential assets. This overall limited project selection aligns with a more conservative approach to spending future project dollars.

Rising Excellence in Managing Assets and Embracing a Consumer-Centric Approach

Multifamily housing is undergoing a twofold transformation, characterized by a surge in asset management excellence and a shift towards a more consumer-centric approach. 

NMHC’s Annual Meeting brought asset management to the forefront, addressing challenges, discussing legislative support, and emphasizing the importance of efficient asset oversight. Companies excelling in this space had notable gains in third-party property management unit counts, highlighting the widespread industry recognition of the crucial role effective asset management plays in overcoming challenges and ensuring sustainable growth. 

The sector is embracing a consumer-oriented model, placing a premium on factors like location, amenities and community engagement.

–Brian Oberg, Principal

This sector is also embracing a consumer-oriented model – a strategic shift that places a premium on factors like location, amenities, and community engagement – aligning with increased demand, especially in The Sun Belt, where homeownership challenges are prevalent. Rental prices in high-demand markets show resilience or upward trends, while older inventory faces reduced demand and growing vacancies. The combination of a commitment to asset management excellence and consumer-centric strategies positions the multifamily housing sector for success in a dynamic and evolving real estate landscape. 

Opportunities on the Horizon

Despite some challenges, there’s a positive outlook for the latter half of 2024. The expected surge in activity hints at potential opportunities for those adept in navigating changing market dynamics. Developers, in the face of reduced transactions and lower average asset values, are shifting from fearing mistakes to a fear of missing out, indicating a cautious optimism for increased activity. By navigating financial challenges and strategically adjusting project portfolios, the sector is positioned to address current uncertainties while gearing up for future opportunities. 

The multifamily housing landscape is evolving, and stakeholders are advised to stay flexible, employing strategies that consider regional variations and market shifts to capitalize on emerging prospects.  

Despite the uncertainty, NMHC highlighted the sector’s resilience and adaptability, reinforcing the positive outlook for the latter half of 2024. Successfully navigating this landscape requires a creative and integrative approach to land use and Bohler’s team can help. Our seamlessly integrated services like surveying, planning and landscape architecture, empower you to optimize the building footprint and deliver flexible housing solutions without compromising on amenities.  

Ready to chat about your next multifamily project? Connect with our team of experts to get started.