On the development front, concerns about overdevelopment in the sector abated some from a year ago. A year ago, more than two-fifths of respondents (43.0 percent) said there was “too much” development occurring vs. 35.0 percent who said it was the “right amount” and only 12.0 percent who said it was “too little.” This year the “too much” number dropped by 8 percentage points to 35.2 percent, while the number of those saying “right amount” ticked up to 38.3 percent. And the “too little” sentiment ticked up more than 4 percentage points to 16.4 percent.
In answer to an open-ended question asking for their thoughts, some respondents did still identify overdevelopment as a long-term concern.
“There seem to be many new owner/investors getting into this market that believe rents will never go down,” one respondent wrote. “At some point overbuilding will catch up with population growth, forcing rent decreases to maintain occupancy levels.”
Another concern that popped up in a few respondents’ answers was overall affordability.
“I believe that a number of cities are facing this dilemma and at some point we may have vacancies not because of not having enough people, but because many just simply cannot afford what is out there and the current costs of construction are so high,” the respondent wrote. “I suspect some form of shared housing will be the next step.”
Indeed, co-living properties are popping up in markets across the country. Often, these projects mix more conventional studios and one-bedroom apartments with suites of rooms designed for roommates. One example is co-living operator Ollie’s Alta+ project located in the Long Island City neighborhood of Queens, N.Y. The 422 beds at Alta+ include studio apartments and suites of bedrooms rented out to roommates.
Sentiment on occupancies swung to being considerably more favorable than it was a year ago. In all, 50.3 percent of respondents believe occupancy rates will rise over the next 12 months, up from 41.0 percent in 2018. Meanwhile, only 22.2 percent said they think occupancies will fall (down from 26.0 percent who answered that way last year). Another 27.8 percent said there would be no change, down from 33.3 percent in 2018.
The same thing was true when it came to rents, with 73.3 percent who said multifamily rents will increase in the next 12 months. That’s in-line with the number from 2017 and up from the 66 percent who said rents would rise in last year’s survey. Conversely, while almost one-fifth of respondents last year (19.0 percent) said rents would decrease, that number dipped to just 12.2 percent this year. Another 14.5 percent said they expect no change.