As contemporary tenants are shifting their
needs and demands, today’s housing market is undergoing tons of changes - and
it’s impacting square footage. In order to accommodate the growing populations
flocking to metropolitan areas, multifamily units are getting smaller in major
cities all over the country.
The question on everyone’s mind is how this
new trend will impact the commercial market. Here’s what investors, developers,
and landlords need to know:
Urban
Areas are Growing
So what’s the main cause of this sudden shift
towards small? Expert analysts are saying it’s all about location.
According to the National Multifamily Housing Council’s Vice
President of Research, Caitlin Walter, “(Multifamily units) are getting
smaller. Part of that is where apartments are getting built.”
As growing cities around the U.S. are becoming
hubs for business and technology, big metropolitan areas are expanding.
Resultantly, they’re attracting new residents looking for jobs, education, and
other opportunities within these thriving locations.
Bigger populations mean that the renters
market is undergoing some growing pains. The increased volume of apartment
hunters requires a boost in supply to balance out the spike in demand. The
multifamily module is best fit to accommodate this shift as these assets are
able to house a large community within a tighter plot of land.
It’s
Focused on the New Developments
Don’t think that all apartment units are going
to be downsized to fit into this trend.
The square-footage reduction will be most
prominent within the newer developments that are cropping up. The existing
multifamily buildings will be largely untouched while the up and coming
properties will be much, much smaller.
This relationship will create a massive
disparity between the sizings of the multifamily units on the housing market.
Where
is the Space Being Cut From?
Bedrooms are taking the hit as square footage
is being shaved off of these multifamily units.
Today’s developments are mainly harboring
studios and two-bedroom units. The three-bedroom apartment is becoming a thing
of the past as many projects are determined to squeeze the maximum number of
units into their development module.
Smaller
Units are Fueling Affordability
Fortunately for students and members of the
workforce, living in cities is becoming more affordable - thanks to the
widespread downsizing of apartments. With more single and double bedroom units
available on the market, the price points are correspondingly adjusting.
The
Wrap Up
All in all, it’s important for everyone
involved with the multifamily industry to be aware that apartment units are
being downsized.
Investors and developers should note that this
trend is responding to a tenant demand. The small apartment module is meeting a
need for smaller and more affordable housing options within crowded cities
around the United States. New multifamily properties can benefit by responding
to this trend which has the power to attract tons of tenants.
However, it also means that bigger apartments
will be in short supply amongst newly developed buildings. That said, appealing
to the opposite market can come with its fair share of benefits. Families with
children will likely need larger apartments for their metropolitan homes, so
supplying that can be incredibly prosperous.
Multifamily landlords and property managers
should be ready to handle the influx of tenants. With smaller units, buildings
will have more individual residents - which can have a huge impact on
day-to-day management responsibilities.
These 5 points will keep you ahead of the
game. Don’t forget to include these within your upcoming CRE strategies.
Comments
Post a Comment