Multifamily to remain resilient to effects of COVID?

Question

According to JLL:

I tend to agree, though it's hard to generalize across all of multifamily since there are so many different types and classes. The report goes on to say that occupation density will be a factor for investors (logical given that proximity is such a contributor to COVID contagion). So those urban core assets where elevators and other enclosed and high-density spaces are prevalent might make some uncomfortable and result in less demand.

I'm actually optimistic about COVID _not_ affecting the decades long trend of population migration to urban cores, but maybe I'm being naive. Do you think high-rise multifamily will be negatively affected by COVID long term? Would you move money from urban core to suburban garden style multifamily as a result?

Joseph Cacciapaglia · Answer

I expect multifamily in some of the densest cities to see some softness. I think this will be partly because people will move to the suburbs, but also because they'll be moving to lower priced cities. The workforce just became a whole lot more mobile. I already know of a few people planning to leave places NYC, Philly, and D.C. to come to San Antonio. Now that they can take their jobs with them, cutting their housing costs in half (or more) while still having a decent little downtown nearby has become a lot more appealing. I'm guessing that many less dense and more affordable cities will benefit from this whole situation.

Bjorn Ahlblad · Answer

Unless we develop a vaccine we are looking at some permanent lifestyle changes and the inner cities will become a thing of the past along with the accoutrements that made downtown living so attractive to many people. Inner cities were already being negatively affected before COVID, and the flight had begun due to poor management by city government and changing living conditions.

Todd Dexheimer · Answer

It's a big event and will have scars. I guess yes.

One of the big reasons homeownership declined was the mindset shift of the great recession. That was also one event. That's all that it takes.

Time will tell, but I am staying away from anything in the core and only focusing on apartments with a lot of green space and parks nearby.

Todd Dexheimer · Answer

I think that we will have an urban flight, causing high vacancies in urban core, especially mid and high rise.

Think about the tenant living on the 40th floor that moved in because of the amenities and proximity to all the entertainment and restaurants. All that stuff is shut down and as it opens back up isn't the same. They can barely go outside to go for a walk, no parks close by, little green space. In order to leave the apartment, they need to take the elevator and walk the hallways, not able to get 6 feet away from other tenants. They're sitting in their 600 sqft apartment with windows on one side, while their parents are enjoying their yard and nearby parks and their friends that live in suburban apartments are enjoying the trails and parks nearby and the green space the apartment grounds offers.

Ryan Daigle · Answer

@Todd Dexheimer I agree that is the case, but will people be adjusting their behavior because of one incidence of this unique pandemic? Will they be willing to throw away all the benefits of urban living (which brought them there in the first place) because of this? Right now I'm guessing "no", but it's just a guess.

Multifamily to remain resilient to effects of COVID?

Multifamily to remain resilient to effects of COVID?

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