Multifamily units in close proximity to mass transit, jobs and lifestyle amenities remain at peak demand. Data shows that these walkable communities are attracting not just young professionals and the millennial generation, but also empty nesters who are selling their large suburban homes and migrating to cities. RENTCafe’s analysis of Census Data found that senior renters are actually the fastest growing renter segment in the U.S. and that the number of renters over age 55 has increased by 28 percent. Meanwhile, the National Association of Realtors found that 62 percent of millennials prefer living in walkable communities.
As evidenced by strong occupancy rates in Hartford, New Haven and Stamford, walkable communities are in high demand. As noted in a recent blog post, demand for multifamily housing in Hartford remains strong with occupancy rates coming in at or above 95 percent. Many of these units are in converted office buildings within walking distances of arts and entertainment attractions, and restaurants, including those in the Front Street District.
In Fairfield County, Stamford remains a hub for new multifamily development. One of the fastest growing cities in the state, Stamford’s population was 122,839 at the 2010 U.S. Census and rose to an estimated 130,824 in 2017. And, according to Marcus & Millichap, Stamford kicked off 2019 with an apartment vacancy rate below 4 percent.
Home to more than 300 restaurants and UConn’s Stamford campus, the city offers a walkable downtown and a wide variety of multifamily housing options, ranging from apartment conversions to lifestyle concepts such as the 82-acre Harbor Point development. With more than 2,600 units already built or approved, Harbor Point will grow to include an additional 1,400 units.
In nearby Norwalk, the community is exploring a creative solution to meet the need for workforce level housing. The Norwalk Redevelopment Agency has proposed the creation of micro apartments, which, at less than 400 square feet each, are aimed to attract the young professionals who desire easy access to mass transit but can’t afford larger units.
In the Boston metro…
Demand outpacing supply in urban cores is nothing new. But many individuals priced out of these competitive markets are seeking similar amenities in nearby communities. We see this trend manifested in lifestyle concept conversions of vacant retail properties which aim to attract tenants by combining apartments, restaurants, fitness centers, entertainment venues and other amenities under one roof.
In Mass., the Watertown community has seen a surge in redevelopment as residents were priced out of Boston and Cambridge. Offering easy access to rail transit and with many development projects underway, it is estimated that 25 to 39 year olds now make up a third of Watertown’s population.
“As prices remain competitive in the Boston market, we see residents looking for affordable housing options that still offer easy access to the amenities found in an urban core,” Edward Jordan, Managing Director, said. “This is great news for investors seeking opportunities in these up-and-coming communities where there is still opportunity to buy below market value and maximize returns.”
According to CoStar, 20,000 apartment units were under development in the Boston metro as of February 2019. It is estimated that more than 11,000 of these units will come to market in 2019 – a sharp rise from the 8,700 new units added each year from 2015 to 2018. While many of these units fall into the category of Class-A / luxury, CoStar data shows demand for multifamily units in Boston remained strong across asset classes in 2018, with Class-C and Class-D vacancies closing out 2018 at 2.8 percent (compared to a 7 percent vacancy rate among Class-A assets).
A recent article in The Real Deal notes 2,255 Westchester rental units will come to market during the next three years, with the majority concentrated in vibrant, walkable urban cores such as New Rochelle and White Plains.
“Redevelopment is driving a lot of activity in the Westchester submarket,” Bradley Balletto, Vice President of Investments, said. “Multifamily investors have an opportunity to maintain strong occupancy rates and create the conditions to raise asking rents by investing in assets that are near mass transit and urban centers. New York City is a competitive market and when people can get many of the same amenities – and a similar lifestyle – for a more competitive rate, demand for workforce level housing remains strong.”
Keeping in line with the lifestyle concept development trend, three hundred apartment units have been proposed along the former IBM site in White Plains which The Journal News reports would be a “work-life-play” community, bringing urban conveniences and amenities to the backyards of those living in the suburbs.
For investors who are looking to add new multifamily assets to their portfolio and capitalize on the demand for walkability, seeking undervalued assets in communities in the early phases of revitalization can yield positive returns. By keeping a close eye on the markets neighboring the most sought after communities, investors can maintain strong occupancy rates and position their portfolio for continued growth.
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