Posts

What Is the Great American Move?

For the past few decades, major metropolitans have experienced substantial real estate growth thanks to exciting nightlife, walkability, and strong job opportunity. But as COVID-19 continues longer than most would have expected, real estate pundits are noticing a shift trending toward lower-density, suburban areas and away from high-density locations. This change of heart and action by the market is being dubbed the ‘Great American Move’.

The pandemic is not the only driving factor behind the spike in migration to suburbs and smaller metropolitan cities. Before COVID-19, suburban locations were already attractive alternatives to major cities thanks to quality school systems, lower-cost housing for more space, and a stronger sense of community. In addition, thriving suburban areas have expanded to offer more desirable entertainment and nightlife options historically only found in metropolitan areas.

According to the Urban Land Institute’s (ULI) Emerging Trends Report, young, Millennial professionals starting families are major proponents in driving the ‘Great American Move’. The population in family formation years (aged 30-49) is expected to grow by 8.4 million people in the next decade. The report projects “this family segment to be a boon to the nearly 80 percent share of household growth that we expect will be captured by the suburbs in the years to come.”

COVID-19 has only accelerated the market’s shift in demand toward lower-density locations.  Trends like working from home (WFH) have provided residents unprecedented flexibility when deciding where to live. As a result, residents are capitalizing on the lack of a commute while their dollar goes further in terms of living space. An important trend to note as many real estate professionals expect the majority of businesses/companies to permanently implement at least partial WFH policies in the future.


Click here for the ULI Emerging Trends in Real Estate 2021 report

“Like” us on Facebook at www.Facebook.com/EPICamg

Subscribe for more blog posts, news updates, and more at www.EPICamg.com

Suburbs More Viable Than You Think?

In a recent article for Multifamily Executive, author Mary Salmonsen discussed what she learned from the MFE Conference in Las Vegas and why some suburban areas across the nation could provide favorable investing conditions for investors, asset managers, and developers.

Despite some fundamental differences and the inherent unknowns that come with penetrating a new market, multiple industry pundits believe the risks might not be as bad one may think.

“I’m convinced that, even at this point in the cycle, you can go to the suburban categories, the right kind of suburbs, and not add any risk to your investment strategy, but actually also achieve a better yield and save a risk-adjusted return,” said Jay Parsons, vice president of MPF Yieldstar, in the opening section of his panel presentation “The Nation’s Strongest Under the Radar Markets,” held Sept. 19 at the MFE Conference in Las Vegas.

Parsons didn’t overlook the obvious advantages of investing in dense, urban areas. He noted factors like construction incentives and more willing investors as main reasons why urban areas are so attractive for multifamily investments and developments. But at the same time, Parsons lists those same urban market strengths as potential barriers as well, due to the cost of investor capital and the extended time it takes to build.

On the other hand, suburban areas have their own barriers to entry. In many cases, suburban cities have more restrictive zoning laws against multifamily properties. Furthermore, suburban locals might show ‘not in my backyard’ resistance to multifamily construction. Having said that, those who can bypass suburban barriers could be in line for better yields with little to no added risk.

Zillow senior economist,  Aaron Terrazas, followed Parsons by taking a more detailed look at the flucuation of rent growth in the country’s strongest metros and cross-examining his findings with Zillow’s ZIP code-level rent appreciation data. He accredited market rent growth to specific local factors like Atlanta’s infrastructure and lifestyle investments or Sacramento being a satellite market to the Bay Area. In summary, Terrazas found that each smaller market that experienced growth had a unique factor that could make it a more attractive to investors and developers than a broader, national report might suggest.

“The reality today is everybody has to do their homework,” Terrazas said. “There’s no single national narrative. Things are local, the story’s local, and you have to look at the whole data to understand what’s happening here. You can’t just take a single national line.”

Click here to read more from Mary Salmonsen and Multifamily Executive