The National Multifamily Housing Council (NMHC) Research Forum brings together the industry’s top research analysts, data scientists, and industry executives each year to review the most pertinent challenges facing the industry. The event also allows for research and data experts from across the country to build their networks and share solutions with colleagues.
Last month, Berkadia’s research team made the trek to the 2019 NMHC Research Forum in Denver, Colorado. Analysts Linda Muller and Sarah Sifuentes experienced the data-driven event in person and provided a first-hand report, detailing innovative solutions that industry leaders have recommended in response to the biggest issues facing multifamily.
The following are just a few of the major takeaways from one of the most informative and insightful multifamily industry events of the year:
1. Innovation Needed to Offset Rising Costs
The shortage of affordable housing was a main topic of conversation at the NMHC Research Forum, specifically potential solutions for offsetting the growing costs of construction. Accelerating costs have limited the ability of developers to focus on affordable housing, so reducing those costs by way of improved logistics was a key topic of conversation.
Trammell Crow Residential’s Managing Director, Jarvie Worcester, and Niles Bolton Associates’ President, Ray Kimsey, emphasized that many developers are adopting modular construction systems as an effective, time-saving strategy that limits overall costs.
Worcester and Kimsey also noted that more developers are pursuing vertical integration opportunities as a means of improving synergies and bringing down the costs of development. For example, some developers have invested in expanding their in-house labor pools as a means of anticipating labor shortages in select markets. Likewise, more and more developers are acquiring designers and digital specialists to bring more elements of the development process in-house.
2. Suburban Sprawl Won’t Slow
Much conversation at the NMHC Research Forum was made about the shift in multifamily development out of traditional urban cores and into select suburban markets. Issi Romem, Chief Economist at Trulia, presented a comprehensive data analysis on the topic, pointing out how densification has slowed in the country over the past 30 years. At the same time, urban density reaching its limit was recognized as a major force driving pushing construction into the most populated suburban markets.
The data predicts that construction will continue to be centered more and more around pockets of suburban markets where employers and work-live-play developments can serve as anchors for growing populations, especially young, transient professionals with high incomes. Soon these areas are expected to deal with the same challenge faced by dense urban areas, i.e., the tension between sprawl, affordability, and retaining the history and character of the neighborhood.
3. Rent Control Needs a Rebrand
The topic of rent control was discussed at length during the NMHC Research Forum, in particular how the discourse surrounding rent control has become a barrier for constructive solutions. During a keynote panel featuring NMHC Vice Presidents, Jim Lapides and Caitlin Walter, the pair presented research that revealed just how differently the public perceives the issue compared to members of the industry.
In particular, renters are skeptical of the notion that development translates directly to job growth and housing affordability, assuming the opposite is more likely to be true. The recent rise of evictions has also placed voters at odds with landlords, who are widely blamed for systematic housing affordability issues.
Experts pointed toward innovative and creative affordability strategies, such as the recently piloted Lower Income Voucher Equity (LIVE) Program in Denver, Colorado, as solutions that have the potential to improve the perception of the industry as it searches for long-term solutions to affordability.
The LIVE Program partners employers and developers to make market-rate units available to workers. These units are subsidized by employers who leverage the available housing as a recruiting and retention tool.
– Remy Albillar, Research Analyst