This sector didn’t just survive the pandemic – it thrived!
As many of you know PCRP Group pulled up stakes on purchasing any multifamily real estate opportunities in 2020 and a good part of 2021. We had no data to rely upon historically as it pertained to the multifamily housing industry and a global pandemic that triggered eviction moratoriums. So, we erred on the side of extreme caution to protect our investors from what was arguably considered the complete unknown.
That said, the economy, as well as the real estate sector, has come roaring back, and so have we. We are exploring several amazing multifamily investment opportunities in various parts of the country. A lot of deals we’re exploring and a lot of underwriting taking place.
Many of you have expressed interest in investing with us as we get further down the line with our next multifamily investment purchase, so we thought we would highlight how the pandemic has affected the multifamily sector and the trends we’re seeing in the sector.
Post-Pandemic Trends for Multifamily
- Tenant demand for multifamily rentals is still very high and rents are back to record levels throughout most of the country; Secondary markets are leading the rent growth
- Vacancy rates are extremely low in most markets; the pandemic may have hurt demand for retail, office space and hospitality, but the occupancy rates for multifamily apartment communities is well above 90 percent
- Supply chain issues and high construction costs are slowing development of multifamily housing communities, whereby the housing supply is not keeping up with demand
- As rents increased appreciation values of single-family homes spiked, putting greater pressure on the need for affordable housing options such as multifamily communities
- The pandemic has accelerated the need for even more housing stock like never before
These factors are very favorable for multifamily are not going unnoticed with investors. Investors are very bullish on investing in multifamily apartment communities. Institutional capital has been drawn to this asset class for quite some time in large because of the stability long-term.
Multifamily is the only truly essential asset class. We don’t need a retail establishment to buy goods, and we apparently don’t need office space anymore to conduct work in the way we did just a few short years ago. But we need a roof over our heads.
Mutifamily real estate, like all housing, fulfills a basic human need – the need for shelter.
What are some other trends we’re seeing? Conversions
It wasn’t unusual to have a hotel that might have been performing poorly be converted into a multifamily apartment community. But there were limitations with hotels in terms of configurations, and the conversions tended to be smaller units.
Fast forward to an office-weary post-pandemic world, and the office building is getting repurposed to apartments. Roughly 41% of the conversions completed are in former office buildings. The compelling features that an office building conversion has is that there is much more flexibility on delivering a product that has both size and an open concept, which is much more desirable to prospective tenants.
The pandemic has significantly hurt demand for certain types of commercial real estate such as offices, hotels and retail space, however apartments are performing exceptionally well with occupancy rates well above 90 percent and rents growing at a rate that is significantly outpacing inflation.
What Are the Post-Pandemic Migration Trends?
Once a great number of workers realized that they could work from almost anywhere, many decided to make a move to better weather or more recreation or less expensive locals to name a few of the reasons for these migration patterns. Additionally, 40% of workers have moved to a hybrid or complete work from home model.
So, it was no surprise that most of the migration was trending to the southeast and western regions.
Top 10 Real Estate Markets In the Country
According to PricewaterhouseCoopers (PwC) these were the top-ranked real estate markets for 2021:
- Nashville
- Raleigh/Durham
- Phoenix
- Austin
- Tampa/St. Petersburg
- Charlotte
- Dallas/Fort Worth
- Atlanta
- Seattle
- Boston
We, have been big proponents of investing in some of these markets for years now – namely: Nashville, Raleigh/Durham, Austin, Charlotte, Dallas/Fort Worth and Atlanta.
In a nutshell:
There are many reasons to be investing in multifamily apartment communities today. But given how extraordinarily well the multifamily industry fared during such an emotionally and economically devastating event such as a global pandemic speaks to the resilience of this type of investment.
Apartment investors are reaping the benefits of very favorable rent growth, record low vacancy rates and supply and demand imbalance that will keep multifamily investments a prime asset class for many years to come.
With all of the factors we see: lack of affordable housing, increased housing costs, rising construction costs, increased housing demand, migration patterns as well as a number of other metrics we track, we believe multifamily investments are one of the best real estate investments one can make to create wealth.
After all, it’s no secret that real estate investing has contributed to creating 90% of the world’s millionaires.
If you would like to learn more about multifamily investing, download your free e-Book “How Multifamily Investments Can Fast-Track Your Retirement”.
Ready to Learn More?
The best way for you to learn more about passive investment opportunities in commercial real estate syndications is to join the PCRP Passive Investor Club.
Through the PCRP Passive Investor Club, you’ll get a priority review of all the deals we offer. We’ll work with you to determine your investing goals and then present you with the best deals to meet those goals. We’ll then guide you every step of the way as you invest in those deals.
So if you’re ready to start investing passively in institutional-grade, commercial real estate in fast-growing, climate-resilient markets in the U.S., join the PCRP Passive Investor Club – IT’S FREE! – and get started on your path to EARN PASSIVELY and LIVE ABUNDANTLY!
If you would like to know more about what we do and how it may be of value to you, please reach out to us anytime. We’re always happy to help!
