Looking ahead in 2021
Factors Driving Multi Family Rentals Demand in 2020 and beyond
Short term rentals have changed quite a lot since the business started over 10 years ago. The multiple options available coupled with affordable rates have made them attractive but the market has mainly been organized around individual and single family travelers. Demand for multifamily rentals has risen significantly in 2020 driven by emerging market realities. Here are some of the factors impacting demand for short term multifamily rentals.
Working from home
Since Covid-19 struck, many companies have allowed their staff to work from home and this has created a demand for multifamily homes. Many people now view the home as a place where they can work as well as live and thus the need to have a more habitable space. The possibility of so many people working away from the office was a far- fetched projection as early at the beginning of 2020. This is now a reality that developers are having to adopt in their plans. As economies rise from the Covid-19 depression, more people who might be living in places they don’t like will join the queue for multifamily rentals.
Heavy investment in single unit short term rentals across the US in the last 10 years has created a supply gap for mufti family units. This scenario is evident in the supply shortage which has helped shore up 2020 prices in this sector. While this imbalance persists, demand will continue to rise and investors will be looking to recoup some of the losses suffered in 2020. Some key markets projected to grow in this sector include Las Vegas, Santa Ana, Mesa, St. Louis, Albuquerque and Virginia Beach.
The 2021 and beyond home will be completely different from current norms. Space is more important than anything else in a home. Remember; home will now not just be an evening and morning place but you will be there for most of the time especially if you will be working remotely. Some of the amenities in high demand in multifamily homes include high speed internet, cable TV, in building convenient store, spacious recreation rooms, walking parks, gyms and spacious rooftop decks among others. These are necessary to ensure comfort when working from home and also avoidance of close personal contact.
A recent report by Multifamily Housing Council revealed that developers have experienced major project delays occasioned by Covid-19 restrictions. Delayed approvals, social distancing requirements and construction moratoriums have left many projects far behind schedule, further compounding supply problem. Social distancing requirements have limited the number of people who can work on a project at a time, further slowing down even ongoing projects. Materials have also not been in adequate supply due to factory closures domestically and in source markets.
Moving forward, it is apparent that 2021 might not be very different from 2020 in terms of getting back to normal and as such, the current market drivers will persist. Developers will have to keep up with the delays and hope their projects get to the market in time before the tide changes. Multifamily rental market has always stacked above the rest in terms of resilience and profitability in times of crisis and this time might not be different.