How multi-family housing industries are preparing for likely upcoming rental market changes
All over the world, companies and people have been impacted in some way by the 2020 health crisis. Manufacturers are shifting their production lines to support the need for medical supplies, hospitality groups are housing people who have been displaced, food and beverage companies have shifted to delivery and pickup services only, and hundreds of thousands of people have been temporarily laid off from their places of employment.
And while the U.S. government is bridging the financial gap for many Americans and businesses by way of stimulus programs including loan extensions, mortgage forgiveness, and tax relief, the residential, commercial, and multi-family real estate markets may soon begin to feel the effects of all this sudden change.
Commercial Real Estate Work from home employment trends
While we expect medical and healthcare industry infrastructure construction projects and leasing will increase over the next 36 months, companies may reevaluate their current corporate spacing needs as a result of their employees’ transitioning to a “work from home” environment.
As a result, commercial highrise and industrial park financing, leasing, and vacancies may shift based on supply and demand. Companies such as CBRE, Cushman & Wakefield, Lee & Associates, and JLL may offer larger leasing incentives, reduce the price per square foot, and include larger TI buildout incentives to maintain occupancy.
Residential Real Estate Consumer Confidence
While the world economy does not entirely predict the U.S. real estate residential market, many homeowners who are currently facing mortgage challenges may want to move into a shorter-term housing commitment such as a home, townhome, or apartment rental. In addition, the resonating effect of new “work from home” company policies, employees may choose to move and relocate, without standard limitations of local job opportunities or employment potential.
The current challenges could affect those looking to move away from a rental to a home ownership situation as well. Potential new homeowners may not be willing to risk their savings investing in a home during a time where jobs, income, and real estate values are questionable. This could lead to a shift from those wishing to purchase a home to those looking at rentals that offer the same feel of “home” potential homeowners were looking for in a single-family home.
Social distancing may also come into play when looking at real estate markets. The question may be, “Will prospective homeowners have confidence in selecting or staying in a condominium where access doors, elevators, stairwells, and garages are heavily shared vs. a private entrance townhouse or detached home?”
Multi-Family Housing Market Strengths and Opportunities
In the wake of the current crisis, some multi-family housing companies, we believe, will experience stronger growth than others. Consumer confidence will be the key. Historically favored upgraded amenities such as on-site workout gyms, community common shared spaces, or community pools may take a back seat to health-conscious rental features such as private entrances, designated areas for a home office, and designated attached or protected parking.
In addition to a need for more private space, many apartment renters may be ready to move away from the closed-in quarters of a “downtown” or “inside metro city limits”. Job seekers may opt for work from home employment and may need more space both inside their apartment, and more breathing room outside to enjoy walking trails and other recreation activities vs. large-scale gyms with shared workout equipment.
Neighborhood-Style Single-Story Apartment Homes are Uniquely Positioned to Thrive in this Market
As the U.S. government continues to urge people to stay at home, the mindset of many renters is shifting toward finding homes that offer a community feel without having to come into close contact with neighbors. Redwood’s signature design of large, open floor plans with attached garages, a private entrance, personal patio space, and easy access to walking trails and life’s necessities offers a perfect haven in times like these.
Redwood residents have enough space to work from home, cook all of their meals, stock up on supplies for two weeks or more, and spend time outdoors —all without coming within six feet of neighbors. If need be, it would be possible to avoid all contact with people outside the home for a prolonged period, offering peace of mind to those renters who are at risk in this health crisis.
At Redwood, we’re watching and listening to important market indicators about the future of real estate rentals. With multiple new single-story apartment rental neighborhood projects underway serving communities across the midwest and east coast, we are preparing to serve thousands of new residents based on today’s growing market trends in rental living.