W8 UPDATE / 18 October 2012
news from the 2012 Multifamily Executive Conference in Las Vegas
Over the last three years I have attended several AIA and affordable housing conferences across the U.S. (Washington DC, Miami, New Orleans, Vail, Salt Lake City, and Las Vegas). My last trip to Las Vegas was for the Multifamily Executive (MFE) Conference which is sponsored every year by Hanley-Wood publishing and is intended for the market-rate multifamily housing market. Here are some interesting trends in the world of market-rate, multifamily housing:
The last couple of years have been strong for multifamily housing providers and it looks as though the industry will continue to be bullish for the next five to ten years. Over the last few years, the value of home ownership has diminished dramatically, which has been a real boon to the rental market. I can’t tell you how many times I heard people say, “I’m feeling bullish.”
There is a major shift in marketing efforts to start catering to millennials, also known as Generation Y. It’s no real surprise that millennials are tech savvy, get their information from on-line sources, and are more inclined to ride a bike to work. What is surprising is that when it comes to amenities, what they are looking for in an apartment is not so different from prior generations: great appliances, plenty of storage space, and a walkable location. And—just like their parents—millennials are essentially looking for as much square feet as they can afford. I was disappointed to hear this because I somehow thought the younger generation was more enlightened. That being said, they are willing to live in smaller spaces if there are other really cool, common amenities that make up for it. By the way, granite counter tops are definitely out, no matter what generation you are catering to.
plenty of need
A huge need for housing will continue in this country. It is projected to be as high as 30,000 living units per month for the next five to ten years. This demand is being created by two factors: Firstly, there is another baby boom underway. The children of baby boomers are having a lot of kids. Secondly, more people are immigrating to the U.S. than ever before.
low interest rates
Interest rates are expected to stay very low for the next two to three years. However, in four to five years, interest rates might be taking a pretty big up swing. People with A.R.M.s might be in for a big surprise.
A number of builders and developers specializing in student housing advocate installing electric car charging stations. This trend really surprised me. Charging stations cost between $4,000 to $5,000 to install; however, because the user swipes a credit card to purchase energy, they are a potential income stream for property manager, owners, and developers. There are also third party providers who install the required equipment, but then they make all the profit on sales.
I wish I could say there was something about this trip that really inspired me. And although several developers are placing a premium on great design, I was hoping to hear that sustainability was more of a priority for the industry, or at least that millennials were demanding it, but that is not the case. Yes, there are some green elements that renters are willing to pay more for, Energy Star appliances and wood flooring, for example. But it seems they won’t pay more for efficient windows or increased insulation. Renters only seem willing to pay for things that they understand to have a direct impact on their lives. This means I still feel the need to do more to educate my clients and others about the benefits of energy efficiency and sustainability in the housing market.
However, I was happy to learn that it does rain in Las Vegas, and that they do have rainbows.
C Joseph Vigil IV, AIA
architect / founding partner
2012 AIA Colorado North Chapter Architect of the Year