The coronavirus pandemic has changed the way a lot of people work. And that, in turn, has changed where they want to live.
Over the past year and change, many people have abandoned cities and taken up residence in the suburbs instead. Suburban life offers the benefits of larger spaces and more affordable housing. And when you're working remotely on a long-term basis, having extra square footage at home is key.
But not everyone who left the city managed to go out and buy a house. In fact, there's plenty of demand for suburban rentals. National home values have soared over the past year, and not everyone can afford a down payment. Furthermore, a lot of people who are new to the suburbs would rather engage in a trial run before firmly planting roots.
All of this gives real estate investors a prime opportunity to buy or develop multifamily properties in the suburbs. And low-rise apartments may be the optimal solution for suburban markets.
Smaller developments for the win
It's one thing to construct a large building in the middle of a city, where tall structures abound. But in the suburbs, it can be harder to fit in large buildings and complexes. Not only are such development plans likely to be met with resistance from residents and zoning boards alike, but there may be long-standing restrictions on building height that need to be taken into account.
It's for this reason that low-rise apartment developments could be investors' ticket to breaking into the suburban rental market. In fact, 22% of all multifamily development projects proposed in April of last year were low-rise apartments, according to real estate data company CoStar. And that was before the pandemic really began driving people toward suburban communities. In the coming years, that percentage could grow.
Low-rise apartments are also easier to construct than massive complexes. For investors looking to break ground quickly to capitalize on the existing boom, that's critical.
Of course, low-rise apartments aren't suitable only in a suburban setting. They're great for smaller cities, too. In places like Brooklyn, New York, for example, where demand for rentals tends to be high, low-rise developments are a more viable solution in already dense neighborhoods that are heavily built out.
Plus, there are some people who just plain prefer to rent in a low-rise building. This especially holds true at a time when so many of us are used to social distancing as a way of life. And for those who value outdoor space, low-rise complexes lend better to garden apartments, balconies, and other amenities that help renters feel like they're not perpetually trapped indoors.
The Millionacres bottom line
All told, it's a good time to break into the multifamily rental space. A lot of living situations are changing as the pandemic evolves, and demand for rentals is apt to be strong in the near term. Focusing on low-rise projects could make it easier for investors to explore new markets and attract tenants looking for more privacy and less noise.