The multifamily sector in the U.S. saw record-setting performance in 2015, with nearly $139 billion in capital generated for residential properties. International investment is also on the rise, and urban centers continue to see rent growth and development activity.
Let’s take a look at two specific trends in multifamily that bear watching.
A multifamily trend that continues to accelerate, particularly in major cities, is the ultra-luxury rental market. This consists of properties that go beyond high-end materials and design to include posh amenities and services.
Miami’s Brickell district has prime examples of this extreme high-end living option. As a destination for some of the world’s wealthiest, this district is often the chosen location for their second (or third, or fourth) homes. They’re looking for luxury extras but not another multi-million-dollar mortgage. Many developments offer perks that would be found at a luxury hotel, such as concierge services and private drivers.
In Boston, these luxurious properties offer features like granite-slab countertops, high ceilings, engineered hardwood flooring, EnergyStar rated appliances, bathrooms with marble vanities and oval soaking tubs, and terraces or balconies.
At the Hanover Cambridge Park property near Kendall Square, a state-of-the art fitness center, private yoga studio, resident club with billiards and a private entertainment theater sweeten the deal. Outside, residents can enjoy a courtyard with grilling areas, a resort-style pool, outdoor lounge complete with televisions and a designated pet-washing station.
High-end developments in Los Angeles take a page from the book of luxury hoteliers and pamper their residents at home. In Century City, a building slated to open in August will offer a private theater, on-call personal drivers in luxury cars, on-site personal trainers and an indoor lap pool with an underwater speaker system. Other buildings are including amenities like fitness classes and bike-repair stations.
Some of the more practical features being added to multifamily properties directly address the tenant’s desire to save time. People are willing to pay for convenience, and millennials in particular are looking for the live-work-play environment that they can get with multifamily.
Development springing up around transit stations is another important trend for the multifamily sector. According to the Sustainable Cities Institute, transit-oriented development, or TOD, is an approach to development that focuses land uses around a transit station or within a transit corridor. TOD is characterized by:
- A mix of uses
- Moderate to high density
- Pedestrian orientation/connectivity
- Transportation choices
- Reduced parking
- High quality design
The rule of thumb is that TOD occurs within one-quarter mile, or a five to seven minute walk, of a transit station. Its popularity stems from the desire for an all-in-one neighborhood, where people can live, work and play while enjoying convenient access to amenities.
For many renters, proximity to transit has become a high priority. In San Francisco, living near a BART station is the primary consideration for choosing an apartment. Employees cite ease of commute as a primary consideration when deciding on a job.
Transit hubs are generating retail development, entertainment and dining options as well. These make the area even more attractive to potential tenants and help fuel the high multifamily demand in TOD.