It seems that there are two types of people as we flip the calendar to a new year—those who are eager to put 2020 behind them and those who are fibbing when they say they aren’t.
While the first week of the year makes clear that a January 1 wasn’t an automatic reset, we’re among those who believe that 2021 has the potential to be an outstanding year, for both the apartment industry and the world in general.
As we discussed in our year-end recap, 2020 was pretty momentous in the multifamily space. Significant tech advances, numerous examples of compassion throughout the industry, and an apartment sector that remained resilient through challenging times were among the highlights.
Now as we peer forward, optimism is the prevailing sentiment. In a recent guest column for Multifamily Executive, industry leader Doug Bibby said as much. The president of the National Multifamily Housing Council naturally has a vested interest, but he isn’t shy to be transparent if the industry is experiencing challenging times. Of 2021, Bibby wrote: “The silver lining is that the industry continues to adapt and innovate to meet the demand that is in the market, in every way, shape, and form.”
With that, here is a look at some of the hopeful signs we see on the multifamily horizon:
Continued emergence of tech
Even apartment operators who didn’t consider themselves tech-savvy entering 2020 have probably fast-tracked their learning curve. And while concepts such as virtual tours, advanced communication and chat tools, contactless building access and remote maintenance calls served an immediate need during the pandemic, some of them offered a glimpse of the future.
In many cases, processes brought about by necessity proved to be more efficient than longstanding practices. As such, operators will be more prone to adopt some of these platforms, and the platforms themselves will evolve based on feedback of the users. While also including software tools pertaining to cybersecurity, advanced screening options and intuitive pricing tools, we believe the industry will make significant strides on the tech front as a new decade begins.
A return to form for multifamily fundamentals
Predictably, the buying and selling of multifamily properties was relatively stagnant during the middle portions of the year. But the industry’s investment activity ramped back up to close the year, as investors have eschewed waiting for large-scale discounts and are making up for slow second and third quarters in 2020. According to a recent article by National Real Estate Investor, transaction activity was 68 percent lower during the summer but only 41 percent lower in October. The November and December numbers appear to be close to normal activity. What that means is investors, who typically have keen insights on upcoming trends, firmly believe in the future of the industry and are banking on a full-scale comeback.
A litany of comeback stories
We’d be remiss to pretend that everything is rosy. Some markets have been affected more than others, such as Manhattan, N.Y., which is experiencing 10-year lows in average rent as renters flee from the urban core. The year took a toll on privately owned, mom-and-pop type communities, as well. While the world as a whole is primed for an Alex Smith-type comeback story, we believe some of these hard-hit markets will once again begin to thrive, or at least make significant strides in the recovery process.
With 2020 finally in the rearview mirror, the apartment industry enters a new decade with some catching up to do. But the building blocks remain in place, and here’s predicting amazing things for the foreseeable future.