Top 4 Takeaways from the 2024 NMHC Apartment Strategies Conference
What happened: Thousands of real estate professionals descended upon San Diego to attend the NMHC Apartment Strategies Conference and Annual Meeting. There, a distinguished lineup of multifamily experts provided insight. Here are four main takeaways from the conference.
1. Economic expectations: Inflation is declining towards the Fed’s 2% target. This will result in 3 to 4 interest rate cuts during 2024. Many markets are oversupplied with new housing, but one bright spot for demand is immigration. Over 3 million new immigrants will change absorption dynamics. To follow where the demand is headed, look to affordable destinations. Affordability was cited as the #1 reason people move to a new market.
2. Multifamily forecast: Jay Parsons, SVP, Chief Economist, RealPage, sees a steep drop off in apartment deliveries in 18 months. He notes that construction delays today aren’t short-term. This will re-accelerate rents once the near-term supply is absorbed. For now, midwestern cities were cited as the winners for 2024. They have the least new supply and a renewed focus on manufacturing could set these cities up to outperform. In general, the renter remains strong with wages growing faster than rents and consumer confidence ticking up.
3. Using tech to provide a better experience: Data makes everything work. Owners must aggregate, decipher, and implement strategies to use their data. The use of AI will only increase. It’s used now for chat/call bots, delinquency collection, and uncovering common tenant complaints. Standard tech like community Wi-Fi and smart building access are also important. These not only add value to the tenants but are ways of collecting data.
Case in point: According to Scott Wesson, SVP, Chief Digital Officer of UDR, resident satisfaction increased when their onsite staff was reduced by 42%. UDR believes its focus on data and speed provides a better tenant (customer) experience.
4. Operational and public policy risks:
• Insurance costs – The largest owners are taking insurance in-house through self-insurance programs and creative partnerships. Having scale matters. Master policies from third-party managers can help smaller owners find cost-effective solutions.
• Regulatory changes – The rent control discussion won’t go away and continues to spread. Rent control 2.0 is being marketed as “anti-gouging” with light just cause eviction policies.
• Rising operating costs – Many large owners are now operating in centralized pods for maintenance and have found ways to make the assistant manager role a back-office position.
➥ THE TAKEAWAY
Looking ahead: Like many, I was hoping to hear all the reasons why transaction activity would pick up in 2024. Instead, the latest buzzword—cautious optimism—tempered expectations. Dominating the sessions were topics on supply, rising costs, and regulations. And, distressed owners were hardly discussed as most believe this to be of minimal consequence. So, we all wait for transactions to increase. In the meantime, we continue to focus on the basics of our business and hope for interest rate certainty. 2024 appears to be shaping up as a year of transition.
SAN FRANCISCO OFFICE:
2 Embarcadero Center, 8th Floor
San Francisco, CA 94111
729 Washington Ave N, Suite 600
Minneapolis, MN 55401
Please subscribe me to the Calvera Insider.
GET INSIDER UPDATES
GET INSIDER UPDATES
Performance data listed in this website or is otherwise provided by Calvera Partners, LLC, or its affiliates (“Calvera”) with respect to a particular property or project represents past performance calculated for the relevant project and does not purport to reflect the overall performance of any private funds managed by Calvera, which may include other projects, as well as charge additional fees or carried interest, or have additional expenses, which would reduce the overall performance of the project from the perspective of a fund investor. Past performance does not guarantee future results; Current performance may be lower or higher than performance data presented. Calvera is not required by law to follow any standard methodology when calculating and representing performance data; the performance of any of Calvera’s projects may not be directly comparable to the performance of other investment vehicles or funds; and qualified potential investors can contact Calvera Partners for more current performance data of any private funds managed by Calvera.
This website is provided for informational purposes only. Nothing contained in this material is an offer or solicitation to buy or sell any security. In addition, (i) any securities offered to investors that respond to any general solicitation or general advertisement made by Calvera, may be sold only to accredited investors; (ii) such securities will be offered in reliance on an exemption from the registration requirements of the Securities Act and such securities offered are not subject to the protections of the Investment Company Act or required to comply with specific disclosure requirements that apply to registration under the Securities Act; (iii) Neither the SEC, nor any state securities regulator, has passed upon the merits of or given its approval to any securities offered by Calvera, the terms of the offering, or the accuracy or completeness of any offering materials or the accuracy or completeness of any of the information or material provided by or through this website; (iv) the securities will be subject to legal restrictions on transfer and resale and investors should not assume they will be able to resell their securities; and (v) investing in securities involves significant risks, and investors should be able to bear the loss of their investment. Please click here for additional important disclosures.