July 17, 2017
By Dennis Kaiser
Passco Companies’ Gary Goodman is speaking on a panel at Connect Orange County entitled: Building Multifamily for the Next Workforce Generation and Empty Nesters. Connect Media asked him to share a few insights from the planned discussion on developing for Millennials and Empty Nesters in our latest 3 CRE Q&A. Here’s where to get more information about the upcoming conference on July 27th and register: Connect Orange County 2017.
Q: Do you try to build a multifamily project that takes both Millennials and Empty Nesters into account or is it better to focus on one?
A: This really depends on the submarket. If in a suburban market, it is more likely that developers will want to cater to one demographic. For example, projects located in suburban markets in good school districts will likely attract working professionals, including young couples about to start raising children or young families. These groups of renters are typically looking for apartments in more suburban areas near family oriented amenities and with larger unit sizes.
On the other hand, in urban infill markets, it is very different. Developers in these markets should be catering to both demographics, the working professionals and the empty nesters. There is strong demand from both, as they are each attracted to the lifestyle amenities that these densely developed markets have to offer.
Urban infill markets capture the demands of both demographics, and therefore, developers will definitely want to cater their new apartment communities to the needs of both of these age groups and renters.
Q: What opportunities and challenges do each group present and what solutions are property owners coming up with to address them?
A: The young working professional demographic places a tremendous value on technology. This demographic is looking for the most up-to-date electronic features, bandwidth, integrated sound systems, unique climate controlled thermostats and USB ports in their apartment communities.
Space and storage can be deemed as deciding factors for the empty nester demographic. Several of the people in this age group lived in a single-family home prior to downsizing, so they are looking for apartment communities with a little bit more space to accommodate their furniture and ample storage.
Q: From an investment perspective, what are the types of multifamily projects Passco targets?
A: We certainly target properties that cater to both demographics. From an investment perspective, we’ve often found that the suburban markets present a stronger value opportunity for investors. These markets have higher barriers to entry, as they are dominated by single family home owners wanting to protect their environments. This means that it is harder to develop in these areas, resulting in less competition and more opportunity for future rent growth.
In urban infill markets in the gateway cities, there is no doubt that there is strong demand and that these submarkets are attracting residents. That said, these markets are often overbuilt, running the potential risk of oversupply, resulting in less rent growth and appreciation. Development in these areas is encouraged as cities are seeking for revitalization, offering tax breaks and other entitlement incentives to bolster new development activity.
For comments, questions or concerns, please contact Dennis Kaiser