2016 WILL BE A PIVOTAL YEAR FOR
THE MULTIFAMILY INDUSTRY BUT IN
MANY CASES, IT MIGHT BE A REALITY
CHECK, SAY SOURCES. CHECK OUT THE
FOLLOWING EXCLUSIVE Q&A FOR ALL
YOU NEED TO KNOW ABOUT WHERE
THINGS STAND AND WHERE THINGS
ARE HEADED FOR THE SECTOR.
Annual Multifamily Review & Forecast
Nearly 2,000 of multifamily’s top real estate minds were in attendance at the RealShare Apartments conference, an educational and networking event held in October at the
Westin Bonaventure in Downtown Los Angeles. The overwhelming majority of sources there were positive and optimistic on the sector’s future and overall fundamentals.
Discussions covered the gamut, with trends and topics including renting versus owning, the city as an amenity itself, how to
serve the needs of two generations and why modular design will
be much more prevalent in the future.
According to speakers, a general preference for renting vs.
owning continues to be a major factor in the growth of the multi-family markets nationally. Walkability and a push toward urban
living, regardless of location, are critical to attract renters.
And while the Millennial generation’s propensity to rent
highly amenitized apartments is well known, there continues
to be a push from the Baby Boomers as well, who are looking
to change their living situation—also wanting that connectivity, amenities, proximity to friends, doctors, retail and more.
Flexibility of unit design was also said to be especially impor-
tant to serve the needs of two generations, according to design
experts, who noted that well-executed amenity space, especially
rooftop space, and common areas remain a critical component
of successful apartment communities.
Rents, for the most part, continue to climb. Speakers on the
industry experts panel, moderated by John Sebree, vice presi-
dent and national director of the national multi housing group
at Marcus & Millichap, questioned whether we were reaching
the maximum number of renters that can afford class A rents.
Michael J. Schall, president and CEO of Essex Property
Trust Inc., said that “there is no such thing as producing B- or
C-quality apartments. The new development is in the A category and it’s one of the thinner parts of the rental pool.” He
added, “You’re diluting the pool.”
On the construction side, at least one developer said, “Land
prices are a highly inflationary environment in cities like L.A.
Lots of municipalities have added significant fees the past few
years. But if you concentrate just on construction costs, the
main issue we are having is a labor force issue.” That was
according to Don Mackenzie, head of West Coast development
for UDR Inc.
But one emerging global trend might serve as a solution to
the problems, he explained: modular construction. “A lot of
progress has been made in the modular technologies,”
By Natalie Dolce