What does 2020 hold for the multifamily market in the Southeast? We caught up with Brad Dillman, Cortland’s Chief Economist, to chat about where he sees the segment advancing this year and beyond.
Q: Heading into 2020, what is your broad outlook for the multifamily market nationwide, and in the Southeast specifically?
A: I expect apartment deliveries to increase in 2020, nationally and in the Southeast. 2020 is also likely to be a relatively affordable year when it comes to home mortgages, so we may see rent growth facing some headwinds in the second half of the year. The impact of a more affordable for-purchase housing market could be more pronounced in the Southeast – the region varies market to market, but is generally a more affordable and development-friendly region.
While multifamily may lose some residents to homeownership, I believe that occupancies in 2020 will still be higher than some might expect. There are more than 2.4 million excess 25- to 34-year-old adults living at home – these folks are likely to fill newly-vacated apartment homes. The Southeast will also continue to benefit from net migration and superior job growth.
Q: With so much competition for tenants in the multifamily space as more and more product comes online, what do you see developers, owners and management companies doing to differentiate their product offerings?
Over the last decade, we have seen institutionally owned and operated multifamily housing compete on evolving dimensions; first on amenities, then on services, and increasingly on brand recognition. Brand reflects the overall resident experience associated with both the level of quality of the physical product and hospitality. We expect that well-managed and branded communities will outperform when it comes to attracting and retaining the marginal renter.