On the heels of the great recession, we began to see a trend, as much of the oversupply of condominiums began to be absorbed into the rental market. In both primary and secondary urban settings, led chiefly by millennials, rental demand was very strong.
Originally seen as a byproduct of the recession – the ability to rent in desirable areas at very reasonable prices – we saw this as the beginnings of a trend. We felt that there would be an ongoing need for rental apartments that were more ‘choice’ than ‘necessity.’ While the market for renters-by-need was certainly escalating, so were the renters-by-choice. These are individuals who often had the resource to purchase, and simply chose not to, but chose to rent instead.
Fast forward to today, and a new study by the National Multifamily Housing Council (NMHC) and the National Apartment Association (NAA) has revealed that a variety of factors is impacting demand for new apartments across our nation, and that in short, demand for rental apartments will be skyrocketing for the foreseeable future.
Over the past five years, a record-setting number of new renter households have emerged. To meet demand, the report states that at least 325,000 new apartment homes must be built every year in order to meet this demand.
Developers will need to speed up supply, as only 244,000 apartments were delivered over a four year time-frame, 2012-2016. The full report can be found at the following link on the WeAreApartments.org site.
In two key states in which our company is currently engaged in development projects, the study notes substantial demand. In Georgia, as illustrated in the following metrics, apartment household growth is expected to grow more than 30% by 2030, and growth in rentership almost 31% over the same time period.
In Florida, those numbers are even more compelling, with apartment household growth being expected to grow more than 40% by 2030, and growth in rentership more than 41%.
*METRICS FOR APARTMENT DEMAND IN GEORGIA
*METRICS FOR APARTMENT DEMAND IN FLORIDA
*Source: Hoyt Advisory Services; NMHC/NAA; U.S. Census Bureau.; Axiometrics, a RealPage Company
The approach of The Allen Morris Company to this new phenomenon was to focus on delivering apartment projects that offer all the amenities of home ownership, but in a rental scenario. There was a point where those wishing to rent were relegated as housing’s ‘second-class citizens,’ having to settle for apartments that – even though brand new – did not offer many of the amenities or desirable locations of a purchase.
That is rapidly changing! An example for us is the just-opening Hermitage Apartments in St. Petersburg, FL. The amenities within the facility are amazing, as good as any luxury condo. We even have an art gallery connected with a renowned museum in the lobby.
At our Maitland City Centre mixed-use development in Maitland, Florida, just north of Orlando and well under construction, we will have 220 one- and two-bedroom rental apartments along with 24 live/work units.
Part of an evolving downtown, these apartments will allow both the ‘new’ generation of renters, as well as empty-nesters desirous of living in an urban setting to enjoy easy access to the arts, entertainment and shopping.
At our Star Metals Atlanta development, to be located in the trendy West Midtown neighborhood of Atlanta, this mixed-use community will also include a multi-family residential component to complement an office building directly across the street and retail.
All three of these developments exemplify the new-normal of residential real estate – apartments that offer a broad range of amenities, within extremely desirable neighborhoods.
While the report’s focus was the strong demand through the year 2030, we certainly do not anticipate a ‘hard-stop’ that year. We believe that we are in a new paradigm in the world of rental apartments, one that will be in existence well beyond 2030.
So to that end, the Allen Morris Company is currently evaluating a number of opportunities across key Sunbelt states that would certainly meet the ever-increasing demands of this new generation of renters.