Not everyone needs a retail or commercial space – but everyone needs a place to call home, which is what inspired me to focus my career on the residential market. And lately, more and more people are finding their homes in multifamily housing.
As the ‘Baby Boomer’ generation begins to retire, the number of retirement and assisted living facilities has grown.1 These centers gain appeal from the community events, common areas and activities they provide for residents, and as more and more people reach retirement age, we can expect to see more of these developments.
In addition, demand for investment–grade apartment complexes is booming, with an average five–percent vacancy rate due to new product failing to catch up to demand.2 Major metro markets, especially Las Vegas, Phoenix and Orlando, are seeing numerous developments in urban centers. Today’s tenants are interested in on–site amenities like pools, gyms and meeting rooms, as well as luxury and high–tech details like granite countertops and free Wi–Fi. These demands are prompting many older properties to renovate, increasing costs for builders and property owners – and driving higher rent prices.2
Another contributor to rising building costs is the market demand for new buildings to be eco–friendly and Leadership in Energy and Environmental Design (LEED)–certified. Rental rates have gone up because of increased building costs associated with using recycled materials, energy–efficient appliances and other environmentally–friendly offerings; fortunately, some of these costs are offset by reduced utility bills.
After 20 years with Stewart, I personally continue to find each year in the real estate services industry more remarkable than the last. And as the market evolves along with customer expectations, industry professionals must evolve as well – an interesting challenge as we look forward to what the future will bring.
1 Marcus Millichap Research
2 National Multi Housing Council