COMMERCIAL A Think Real ty Publ icat ion VOLUME 3
The Passive Investing Lifestyle TRAVIS WATTS AND ASHCROFT CAPITAL HELP INVESTORS HAVE MORE CHOICES
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The Passive Investing Lifestyle
IT’S NOT ABOUT MONEY, IT’S ABOUT HAVING MORE CHOICES
by Travis Watts
THE REAL ESTATE BUG I had read an investing book years ago called Rich Dad’s Prophesy by Robert Kiyosaki. The only thing I remember about the book was to “stay out of the stock market” and “invest for cash flow”. Real estate was going to be the ticket to freedom. A couple years later, I ditched my college career and accepted an oilfield job that required 100 hours a week swinging sledgehammers in sub-zero temperatures. I was finally going to make some money, and I knew exactly what to do with that money… I was going to get into real estate. JUMPING INTO REAL ESTATE I first went down the rabbit hole of flipping houses. Who was I fool - ing? I had no connections, I wasn’t a handyman, and I was already growing tired of manual labor. I later switched to vacation rentals because I thought it would be less involved; boy was I wrong. There is nothing inherently wrong with flipping homes or short-term rentals; the problem was, I never stopped to ask myself WHY I was doing any of this. I can tell you first hand; I didn’t enjoy any part of working in the business as a land- lord. Nor was I good at it. BURNING OUT It took several years before I ran out of steam and burned out. It was at this point that I finally asked
myself a very important question that all investors should ask them- selves… “What are my goals and what investment strategy can help me get there?” This was the moment I discovered that my real interest was to be an investor; not a landlord. I was seeking was cash flow and financial independence, so I could live a life on my own terms. I didn’t enjoy managing tenants or rehabbing houses, and I didn’t have much spare time. My single-family rentals had become a second job, rather than an investment.
up to closings, manage contractors, or rehab properties? Sign me up! Between 2015-2016, I decided to sell off all my single-family rentals. Over the next year, I began investing in multifamily private placements AKA “syndications” one after the next until I transitioned my entire real estate portfolio into a hands-off cash flow machine. In early 2016, something incredi- ble happened. I sat down to crunch some numbers, and I found out that I could leave my job. I had more cashflow from my multifamily real estate investments than I had life- style expenses. Leaving my busy W-2 job single-handedly gave me my life back and allowed for a “work-op- tional” lifestyle. I wasn’t ready to move into retirement in the tradi- tional sense, so instead, I decided to pursue what truly interest me, real estate investing and educat- ing others with my free time. This lifestyle change also allowed me to spend more time with the people I care about and start a new chapter with my girlfriend, who later became my wife, and will soon be a mother to our firstborn in January 2022. “It is in yourmoments of decision that your destiny is shaped”
T HE PASSIVE INVESTING LIFESTYLE
Around 2015, I was introduced to two gentlemen at a local real estate investing group who had sold their businesses decades ago and became full-time investors; mostly in mul- tifamily syndications. They were “passive” investors in the sense that they did not “actively” participate in the business of real estate. They had simply invested in hundreds of real estate projects at this point, where they let the General Partners handle the heavy lifting and day-to- day operations. They were hands-off Limited Partners. This was a game-changer in my life. You’re telling me I can invest in real estate, collect monthly cash flow, reap the tax advantages and I don’t have to manage tenants, show
— Tony Robbins
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overworked from time to time in your career. You may not desire the life - style that I have, but I bet spending more time doing what interests you would add value and happiness to your life. Even if you have a desirable lifestyle and career doing what you love, investing in real estate private placements can simply add diversifi - cation to an existing stock, bond and mutual fund portfolio and help grow your passive income. LET’S CONNECT My mission is to educate and give back my time to others who are look- ing to create a life on their terms. Years ago, I made a decision to part - ner with Ashcroft Capital as an inves- tor. I’ve invested in more multifamily deals with Ashcroft compared to any other operator in the multifam- ily sector. There are many reasons I chose to work with Joe Fairless and his team, including their emphasis on capital preservation, a value-add
cash flow business model, detailed monthly communication, and a solid track record. If you are an accredited investor and would like to learn more about investing in multifamily apart- ments with Ashcroft Capital, I would be happy to connect and learn more about you and your goals. To learn more visit www.ashcroftcapital.com/travis Is what you’re doing today getting you closer to where you want to be tomorrow? • Disclaimer: The content shared in this article is for informational purposes only. You should not construe any such information or other material as legal, tax, investment, financial, or other advice. Any reference to an investment’s past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific outcome or profit. Any ideas or strategies discussed herein should not be undertaken by any individual without prior consultation with a financial professional for the purpose of assessing whether the ideas or strategies that are discussed are suitable to you based on your own personal financial objectives, needs and risk tolerance.
WHAT ABOUT YOU? This is a story about building financial independence. The journey is open to you; it’s simply a deci- sion. You and I have different goals and motivations, but one thing is for sure. It doesn’t hurt to add a little passive income to your portfolio. It’s not about money, it’s about having more choices and designing your own lifestyle. You may not have worked in the oil industry, but I bet you’ve been
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Managing the Lifecycle of a Storage Facility
FOUR STEPS TOWARD SUCCESS IN VALUE-ADD FACILITIES
by Jackie Gibson and Scott Lewis
A n interesting part of investing in self-storage is managing an asset through the various stages of its lifecycle. Great success may be achieved in purchasing value-add facilities—properties where the operations are significantly lacking. This can be a daunting task for a new buyer but are a lot of fun after you do it a couple times and reap significant rewards throughout the project lifecycle. The lifecycle of a storage facility consists of four phases: acquisition,
turnaround, stabilization, and dis- position. Each phase has key tasks, that if executed correctly, will set you up for success during the next phase. Patience is key because as much as we’d all like to skip steps, doing so will come at a cost. During the acquisition process, conduct feasibility on the facility and local market. If the market is prom- ising based on your specific criteria, then the process may be moved for- ward by engaging in contract negoti- ations to purchase the facility. Once
under contract, engage in thorough due diligence by examining the site conditions, operations, and financials as well as build the business plan for the facility. Decisions to be made during this process are site improve- ments, expansion potential and what to build, revenue targets, hold time, and capital stack, the level of funding for the project, how and when. This is the shortest of all phases and gen- erally takes a few months. Once you’ve acquired the proper- ty, the next phase is the turnaround.
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The first 90 days of owning a proper - ty are typically the most time inten- sive, and if completed right, allow a quick execution of an operational overhaul so that the property is on a gliding path to success. The first 90 days entail immediate transition of utilities, evaluating vendor contracts, rate adjustments, initial improve - ments to the physical condition of the facility, and ensuring legal compliance. During this time, expect turnover and friction at the prop- erty due to new policies, increased rates, and changes in management. Evaluate street rates for a property by increasing rates if a particular unit type has strong occupancy or lowering the rate should a unit type require movement towards higher occupancy. Once street rates are adjusted, look at the economic occu - pancy of the facility, occupancy of each unit type and then determine if rates need to be increased for exist- ing customers. We look at market rates during this process; howev- er, we are never afraid to lead the market if our demand is there. Initial improvements are key to a business plan for an operational value-add facility. Often these improvements are key to the customer experience at the facility as well as to ensure rentable units. When a facility has been set on a glide path after 90 days of the initial turnover, focus on rebuilding the occupancy and rates at a facility. This is the stabilization phase. Our definition of a stabilized facility is 80 percent occupancy. During this time, efforts focus on marketing to get the right customers in the door at higher rates, as well as incremental price increases to continue closing the economic occupancy gap. Through this stable phase, constantly evalu- ate ROI for marketing and amenities offered at a facility. Streamline staff-
“Managing the lifecycle of the asset is vitally important to maximizing performance and positioning to sell for the highest price.”
ing costs and assign team mem- bers with additional responsibili- ties. In addition, ensure funding for the facility is at the most attractive interest rate. Lower your expense ratios and strengthen DSCR for a property. This is the time to also exe- cute any additional revenue stream options as well as execute a poten- tial facility expansion should the site and demand numbers allow. This is typically executed when a specific occupancy or revenue goal has been reached at the existing facility. Throughout owning a facility, do not take your eye off the disposition of the asset. Ideally you want to start preparing for disposition of a prop- erty one year prior to your intend- ed sale. Don’t be afraid to engage a broker who can evaluate your property financials and the overall facility condition to provide feedback on next steps to sell your property and at what price point. This is also the time to consider completing any outstanding capital expendi- tures or rate increases. Internally, ensure all paperwork and financials are in order by obtaining a trailing 12-month Profit and Loss Statement and Balance Sheet, ensure bank statements are separated from other properties you own and expenses are clearly identified. In addition to the financials, get all contacts and leases together in one place and be ready to pop open the hood on the facility to a potential buyer. When offers are made on the property, consider other factors besides only the highest offer. Ensure the buy- er can obtain financing and deter -
mine the likelihood they can follow through on their commitment by reviewing past transactions. Con- sider timing of the transaction, see if the seller is open to any creative financing options such as seller financing that may also protect your financial position in the long run. Managing the lifecycle of the asset is vitally important to maximizing performance and positioning to sell for the highest price. The lifecycle starts with the acquisition of the facility, and moves through a turn- around phase to stabilization. If you focus on the right things through each phase, when you get to the dis- position, you’ll be sure to maximize the price you can sell for. •
Scott Lewis is the co-founder and Chief Executive Officer of Spartan Investment Group, LLC (SIG). To date SIG operates over 5500 storage units, 200 RV pads,
has completed $11M in development projects, has $115M more underway, and has raised over $42M in private equity. As the CEO, Scott is responsible for the strategic direction of the company and ensuring it aligns with SIG’s mission to Improve Lives Through Real Estate. In addition to Spartan, Scott is also in the US Army Reserves and a combat Vet. Scott graduated from Michigan State University with degrees in Chemistry and Marketing, from Catholic University with a MS in Management, and from Georgetown University with a Certificate in Project Management.
Jackie Gibson is the Director of Asset Management for Spartan Investment Group, LLC. In this role, Jackie is leveraging her 10+ years of logistics,
procurement, project management, and engagement experience to increase quality, profitability, and efficiency for SIG’s projects. Jackie graduated from Mercyhurst University with a bachelor’s degree in Hotel Restaurant and Institutional Management.
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Commercial Real Estate Investors Follow Migration Trends
WHAT THE U.S. HOUSING SHORTAGE MEANS FOR COMMERCIAL INVESTORS
by John Chang
HOUSING SHORTFALL BACK IN THE SPOTLIGHT. Employment growth, reopen-
up with. The current landscape of historically high material costs and insufficient labor in the construction industry will institute additional hur- dles as well. DEMOGRAPHICS AND WIDENING AFFORDABILITY GAP FORETELL GREATER RENTER DEMAND. The accelerated rate of household growth over the next several years is primarily due to the aging Millen- nial cohort. The largest segment of the grouping is reaching their early 30s, an age range that has typically aligned with family formation and the transition to homeownership. The housing shortage has pushed single-family sale prices to new heights, though, raising the bar to become a first-time homebuyer.
The difference between an aver- age monthly apartment rent and a typical mortgage payment on a single-family house in the U.S. more than doubled over the past year. As a result, many households that would like to buy a home but are priced out are opting to rent, directing demand toward multifamily housing, particularly luxury units for those on the margin. At the same time, some young households prefer the flexibility of a shorter-term apart - ment lease and reduced mainte- nance costs as well as the lifestyle and amenities that higher-qual- ity apartment complexes offer. Improved demand for luxury rentals was reflected in the national Class A vacancy rate falling 100 basis points in the second quarter to 4.5 percent.
ing economies, and the revival of population mobility in the first half of 2021 led more people to search for residences after being locked in place during much of last year. This amplified the ongoing housing short - age in the U.S., a storyline that was largely camouflaged by more perti - nent narratives that emerged during the pandemic. Despite record levels of both single-family and multifam- ily development, demand is poised to outpace supply and could further aggravate the shortfall in the coming decade. More than 1 million new households are expected to form in every year through 2031, a pace that builders will struggle to keep
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ECONOMIC MOMENTUM CATALYZING MULTIFAMILY SECTOR. In a clear illustration of the state of the recovery so far, the multifam- ily sector posted one of its strongest periods of performance in the sec- ond quarter. Over 218,000 apart - ments were absorbed in the April through June timeframe, a record going back to at least 1993. The surge cut the national vacancy rate to 3.8 percent, nearly in line with the 2019 low of 3.7 percent, while effec - tive rents climbed above pre-pan- demic levels. The strong increase in renter demand was driven by multiple factors, including employ- ment growth and household forma- tion. More than 1.7 million jobs were added in the U.S. during the months of April through June, spearheading the strongest quarter of household formation in nearly 20 years. Many who were previously jobless found a sustainable source of income, which enabled them to move into their own residence after living with family or friends during the pandemic. DOWNTOWN APARTMENTS STRENGTHENING AS YOUNG ADULTS FIND JOBS. Many recent college graduates were unable to find employment last year when the pandemic disrupted hiring activity. Some were able to fulfill remote roles, which may have prompted them to live with family or friends through the health crisis to save on expenses. Now, as compa- nies are beginning to bring workers back into the office and ramping up hiring, more of the younger genera- tion are accepting jobs and relocat - ing. This is a tailwind for apartment demand, especially in urban areas as people in their 20s often prefer the downtown lifestyle and near- by amenities. The allure of living
downtown has been revived by the reopening of shops, entertainment venues, and attractions. These trends were exemplified in the sec - ond quarter when the urban cores of major markets combined to record 40,000 units of absorption, the larg- est quarterly total dating back to the beginning of this century. INVESTORS FOCUSING ON OUT- PERFORMING SUNBELT MARKETS, PRESSURING CAP RATES. Many people are prioritizing qual- ity-of-life and cost-of-living con- siderations when deciding where they want to live, which is bolstering relocations to the Sunbelt. Phoenix, Dallas-Fort Worth, Atlanta, Houston and Las Vegas each recorded in-mi- gration of at least 35,000 people last year. The additional residents are boosting apartment performance in these metros, garnering the atten- tion of more investors. In Phoenix, vacancy cratered to a historic low of 3.2 percent in the second quar- ter, which produced an eye-catch- ing 16.6 percent year-over-year jump in the average effective rent. Similarly, vacancy in Las Vegas fell to a decade trough of 3.3 percent, resulting in a 13.9 percent rent climb year over year. Other metros with annual rent growth exceeding 12 percent include Riverside-San Bernardino, Tampa, Sacramento and Jacksonville. Many commercial real estate investors are following migration trends and concentrating on sec- ondary and tertiary markets in the Sunbelt, which is expanding the buyer pool and intensifying compe- tition for assets. The average price per unit of transacted apartments grew by more than 10 percent over the past year in Phoenix, Columbus, Jacksonville, Atlanta, Las Vegas and
Pittsburgh. Nationally, the average price grew by half that amount at five percent annually to $171,000 per unit for trades priced $1 million and above. The average cap rate, mean- while, dropped to 5.1 percent, which is the lowest measure in more than two decades and down 100 basis points from 2013. On the other hand, price growth is lagging in some gateway metros like San Francis - co and New York City. The recovery of these markets has turned the corner however, and opportunistic investors remain active. •
John Chang serves as the National Director of Research Services for Marcus
& Millichap. He is responsible for the production of the firm’s vast array of commercial real estate research publications, tools and services. Under his leadership, Marcus & Millichap has become a leading source of market analysis, insight and forecasting, and the firm’s research is regularly quoted throughout the industry and in mainstream business media. John oversees a team of dedicated real estate research professionals who produce the firm’s more than 1,000 annual market research publications and conference presentations. These detailed reports, analyses and presentations integrate economic and financial market trends with insights on all major commercial property types including: Hotels, Industrial, Manufactured Housing, Multifamily, Office, Medical Office, Retail Multi- Tenant, Retail Single-Tenant, Self-Storage and Seniors Housing. John is a seasoned industry analyst who has been quoted in numerous publications and is an active member of the NMHC Research Foundation Advisory Committee, the ICSC North American Research Task Force and the NAIOP Research Foundation. He regularly presents at a wide range of conferences and events hosted by industry- leading organizations such as the NMHC, NAIOP, ULI, CCIM, ICSC, SSA and numerous others. John joined Marcus & Millichap in April 1997 as a Research Manager in the Seattle office. After holding executive marketing and e-business positions with premier residential real estate firms in the Pacific Northwest, he rejoined Marcus & Millichap in November 2007 as the head of its Research Services division. John was elected as Vice President in 2010, advanced to First Vice President in 2013 and promoted to Senior Vice President in 2018.
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As the Pandemic Persists, Renter Preferences Continue to Shift
WHAT THE FUTURE HOLDS FOR THE MULTIFAMILY SECTOR
by Joe Fairless
T he global COVID-19 pandemic accelerated multifamily trends that were already in place prior to the virus’s arrival – work from home (WFH), migration away from expen - sive gateway markets, and increas- ing investor interest in apartment properties. Now, more than 18 months into the pandemic, it’s obvious that those trends have accelerated even more. Imagine they’re a runaway stage- coach in an old-timey Western film – there’s no stopping ’em now! The next few years will bring even more change to the multifamily sec- tor, creating both opportunities and challenges for investors and owners. RE-THINKING LIVING SITUATIONS Earlier this summer, it seemed the U.S. was emerging from the pandemic. With vaccines readily available and infection rates declin- ing, employers across the nation rolled out plans for workers to return to the office, either full-time or part-time, ending more than a year of WFH.
But the resurgence of the virus, driven by the highly contagious Delta variant, has delayed those plans. Many companies including Toyo- ta have announced plans to allow employees to WFH indefinitely, while others – Lyft, for example – have decided to postpone re-openings until Spring 2022. For more than 15 million house - holds, home is an apartment. And of those renters, 41.5 percent work remotely, according to a 2020 survey by the National Multifamily Housing Council and Kingsley Associates. Though some employees want to return to the office as soon as pos - sible because they feel more pro- ductive in an office environment and miss co-worker camaraderie, far more employees desire the flexibil - ity that WFH offers. In fact, nearly three in 10 employees (29 percent) would quit their job if they were told they were no longer allowed to work remotely, according to a recent sur- vey by LiveCareer. Anticipating several more months, if not years, of WFH, renters are rethinking their living situations.
They’re evaluating where they want to live, how much space they require, and the amenities they desire. Likewise, multifamily owners and investors are re-evaluating their portfolios as well, considering new markets and renovating their prop- erties to accommodate WFH. MOVING TO MORE AFFORDABLE LOCALES WFH gives employees the opportu - nity to move to locales that are more affordable and offer a better quality of life. They’re no longer tied to a particular city or metro area simply because their employers are based there. United Van Lines’ National Movers Study, conducted annually, exam- ines the reasons behind Ameri- cans’ migration patterns. Data from March to October 2020 revealed the COVID-19 pandemic influenced mov - ing decisions. The top reasons associated with COVID-19 were concerns for person - al and family health and wellbeing (60 percent); desires to be closer to family (59 percent); changes in
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employment status or work arrange- ment including the ability to work remotely (57 percent); and wanting a lifestyle change or improvement of quality of life (53 percent). Throughout the pandemic, Amer- icans have continued to abandon expensive gateway markets and large urban areas including New York City, Los Angeles, and San Francisco. These markets experi - enced significant population declines in 2020 and into 2021, according to the U.S. Census Bureau. While relocations from these mar - kets haven’t reached “exodus” level, non-gateway markets, particularly those in the country’s interior, have experienced significant population growth and in-migration. For exam - ple, smaller markets such as Austin, Denver, Nashville, Phoenix, Raleigh (N.C.), and Salt Lake City have seen their populations boom, as well as larger markets such as Atlanta and Dallas-Fort Worth. SEARCHING FOR MORE SPACE With Americans spending more time at home, larger apartments are increasingly appealing, particular- ly for those who WFH. Renters who need more space for kids and pets are gravitating to suburban, gar- den-style properties, which tend to be larger and more affordable (on a cost per square foot basis). Multifamily owners and managers have noted increased demand for floorplans that accommodate WFH. Across the nation, one-bedroom units with studies or dens, for exam- ple, have waiting lists, while occu- pancy rates for two-bedroom units have increased, even for those with only one bathroom. Suburban, garden-style prop- erties are also appealing because
of their surroundings. With many Americans afraid to socialize indoors, they’re looking for apart- ments that allow them to enjoy out - door activities, whether its hiking through nearby greenbelts or enjoy - ing the community’s pool. Additionally, many owners are investing in amenities that accom- modate renters who WFH. They’re renovating movie theaters and leas- ing offices to make space for work - Throughout the pandemic, mul- tifamily real estate has been rela- tively resilient, particularly when compared to other property types such as office, retail, and hospitali - ty, according to CBRE’s 2021 Global Investor Intentions Survey. It’s entirely accurate to say that investors have an insatiable appetite for U.S. multifamily assets. Multi- family is one of the top investments, with global investors ranking this sector as the second most preferred asset class behind industrial and logistics, according to CBRE. For 25 percent of investors, multifamily is the most preferred property type. Last year, the multifamily sec- tor experienced a smaller decrease in investment activity than most other mainstream asset types. The sector’s solid fundamentals – low vacancy rates and high rental col- lection rates – made it irresistible to private and institutional investors, both small and large. Roughly $146 billion of multi - stations and Zoom rooms. INSATIABLE APPETITE FOR MULTIFAMILY ASSETS family assets traded hands in 2020, according to CBRE. Cap rates began to compress late last year and have since tightened to historically low levels. At the end of Q1 2021, cap rates had fallen below four percent.
CBRE’s data indicates that more than half of the major U.S. markets experienced very little deterioration in renter demand or rents during the COVID pandemic. However, a number of gateway and coastal metros saw rents fall significantly. For example, rent in San Francisco, San Jose and New York decreased 10 percent to 20 percent. Fortunately, by midyear 2021, vacancy rates in nearly every mar- ket were falling and rents were rising. CBRE forecasts declining vacancy rates over the next 12 months, which will lead to sol- id rent growth of 5.6 percent. The firm anticipates that nearly all U.S. markets will exceed their pre-COVID rent levels by Q2 2022. Over the next 12 to 18 months, multifamily investors will tar- get Atlanta, Austin, Inland Empire (Southern California), Miami, Orlan - do, Phoenix, and Tampa. Investment in suburban multifamily assets will remain strong over that period, with cap rates further compressing across the nation. •
Joe Fairless is the Co-founder of Ashcroft Capital which has over $1B in assets under management. Joe created the podcast, Best Real Estate
Investing Advice Ever Show, which is the longest- running daily real estate podcast in the world and generates over 500,000 monthly downloads. He is also a proud Member of the Texas Tech Alumni Advisor Board for the College of Media and Communication, as well as being recognized as Outstanding Alumni at Texas Tech University, where he is a former Adjunct Professor. He is currently a Junior Achievement Board Member and Volunteer for the Cincinnati chapter and has been recognized by the Junior Achievement’s Free Enterprise Society. Joe volunteers at Crossroads Hospice and was recognized as Multifamily Investor of the Year by Think Realty Magazine.
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Cities Where Apartment Living Best Supports the Work-from-Home Reality
WHAT WORK-FROM-HOME MEANS FOR THE SELF-STORAGE SECTOR
by Mirela Mohan
R emote work has been an option for some workers in the past few years, but the pandemic has pushed the movement into the mainstream. As a result, the home took center stage for those workers that could carry out their job duties remotely. This meant that for renters — who, unlike single-family dwellers, simply did not have that extra guest room or den that could easily be converted into an office — working from home became a challenge in terms of find - ing adequate room for a dedicated workspace. This is where business centers as a community amenity
came into play. Even if they were only partially utilized pre-pandemic, their utility became paramount for rent- ers looking to escape the confines of an apartment in order to carve out a dedicated space for working. But do all cities offer the same kind of opportunity to work within the rental building in a business center? According to a report issued by STOR- AGECafé, a nationwide self-storage marketplace, where you live has considerable bearing on whether you have access to this sort of amenity. The report takes an overall look at community amenities offered within
apartment complexes, considering over 82,000 large-scale buildings in the first 100 most populous cities. Several indicators were consid- ered, including outdoor space (both courtyard and rooftop decks), swim - ming pools, spas, gyms, business centers, and basketball, tennis, and other sports courts. While some parts of the country fared better than others at either indoor or out- door offerings, a slew of Arizona cit- ies proved that renters in both city and suburban locations can enjoy a premier rental experience.
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comes first when it comes to providing access to business lounges within an apartment complex, with 77 percent of renter communities being able to offer this feature. The prevalence of this amenity aligns with the state’s labor profile, as California comes first for its tech industry, support - ed by a significant percentage of its workforce in the technology sector (10 percent). Renters in Texas cities can also have access to rental communi- ties that cater to the needs of those working from home within a residen- tial setting. In fact, Plano (69 per - cent), Austin (68 percent) and Lub - bock (61 percent) rank next for their rentals’ capabilities to support WFH by providing business centers as an amenity. This is hardly surprising given that Texas ranked fifth nation - ally for its tech-based economy, with about eight percent of workforce employed in the tech sector. Charlotte is another city that fares well when it comes to providing rent-
GILBERT, CHANDLER AND IRVINE TAKE THE PODIUM FOR BEST CITIES FOR APARTMENT COMMUNITY AMENITIES When it comes to the cities that offer the best mix of amenities, two Arizona cities, Gilbert and Chandler, are the first to pop up at the top of the list. An up-and-coming suburb, Gilbert, boasts close to 60 percent of its local apartment buildings out- fitted with a diverse mix of commu - nity offerings. In Chandler, about 58 percent of rentals are equipped with similar community facilities. In the case of both cities, all large-scale apartments provide community out- door space as this type of amenity is essential to ensuring a premier rent- al experience, especially as Arizona enjoys sunny and warm weather year-round. Irvine, California is also among the contenders for the best city for rental community amenities, with as many as 55 percent of its rentals providing a diverse mix of commu-
nity features that support a premier rental experience rooted in practical- ity and well-being. As in the case of the Arizona cities, Irvine also shines brightly in terms of offering access to outdoor space, given the similar climate that encourages spending time outside, whether it’s within the rental complex or out in nature. IRVINE, CA, PLANO, TX, AND AUSTIN ARE BEST AT SERVING WFH RENTERS Besides considering which cit- ies offer an overall excellent renter experience based on community amenities, the report also looks at how well cities fared in terms of offering business centers within rental buildings. While they might have seen fluctuating use before the pandemic, once stay-at-home orders took effect, they took on a new role as co-working spaces. This kind of fea- ture varies greatly based on location. Irvine gets top grades for an overall renter experience, and the city also
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RENTERS CAN FIND ADDITIONAL SUPPORT IN SELF-STORAGE AS WFH TREND IS HERE TO STAY About 29 percent of Americans are working from home in 2021, per US Census Household Pulse data. This shift rippled across their living arrangements. Renters that could access a business center within their residential building were able to find a dedicated workspace out - side their homes. However, in the absence of a community business center, many multifamily renters had to find the space for a home office inside their apartments. Making these functional chang- es to the home meant that some domestic items had to be displaced. But help came from a sector that usually plays its part behind the scenes, namely self-storage. Owners and operators of self-storage facili- ties created a solution where poten- tial customers found it easy and safe to store their extra stuff, even amid pandemic challenges.
ACTIVE MARKETS ALLOW REMOTE WORKERS TO MAKE MORE ROOM AT HOME FOR OFFICES From a location point of view, some renters are more favored than others. Storagecafe also has data on self-storage supply across the nation and some cities appear much more prepared than others to address this rising need for storage space away from home. Looking at the top 10 cities for remote workers, Houston is one of the metros best prepared to respond to a need for extra space. With over 9.4 square feet of self-storage space per person, Houston is expected to deliver more than 900,000 square feet of additional storage space to its already robust inventory in 2021. The metros where the WFH popu - lation is strong, but the self-storage market is undersupplied are making strides to make up for the low inven- tory as compared to demand. In fact, metro areas that boast the highest rates of teleworking are also places where self-storage construction is
ers with an opportunity to work from home within a residential business center in 61.5 percent of apartment buildings. Given that North Caroli- na is yet another state that boasts a large share of tech workers, demand for business centers within apart- ment buildings is high. Naturally, the local rental market responded to this demand appropriately. At the other end of the spectrum, Buffalo comes last for the number of multifamily complexes (7 percent) that offer their renters access to a common business lounge where they can work without leaving their residential building. In the past 10 years, Buffalo registered low apart- ment construction levels, with about 2,100 units delivered. Apartments delivered during this time repre- sent 17 percent of 2010’s invento - ry. As for 2021, Buffalo boasts the third-largest construction projection among New York’s largest cities, but co-working spaces are less likely to be a common amenity, given the low demand for this feature.
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thriving in 2021. Boston comes first for its share of remote workers in 2021 (49.4 per - cent), per U.S. Census House Pulse Survey data – a sharp hike from the four percent that worked there under the same circumstances pre-pan- demic. As the need for space outside the home naturally arose, developers amped up self-storage development, with projected construction in 2021 representing six percent of 2020’s inventory. That’s over 1M square feet of self-storage space! Following closely on Boston’s heels, the Washington D.C. metro nabbed the second spot for tele- workers in 2021, with 49.1 percent of its workers operating remotely. As a vibrant economy that continuously attracts newcomers and new busi- nesses – Amazon’s second head- quarters is located just over the river – D.C. is fast to respond to needs for housing and self-storage space.
After a stellar last decade that saw some of the highest levels of apart- ment and self-storage completions in the country, the nation’s capital is bound to continue on this path. In 2021, new deliveries are projected to cover five percent of 2020’s existing inventory, or about 1.4M square feet of self-storage. Tech-heavy San Francisco is another metro area with high rates of work-from-home individuals, with about 46 percent. It’s not surprising that remote work remains strong here as more and more companies are either moving to a hybrid work model or they embrace WFH entire - ly. On the self-storage front, 2021’s development is expected to cover about three percent of 2020’s total square footage, or about 674,000 square feet of self-storage. As America’s financial center, the New York metro area also registers a high share of remote workers,
Mirela Mohan is a creative writer for STORAGECafé. With an academic background in English and translation, Mirela now covers a range of topics including real estate trends, lifestyle and economy. Her previous experience in proofreading academic articles has inspired Mirela to choose a writing career path. In her free time, Mirela enjoys reading, but also hiking and creating art. You can contact Mirela via email. 37.4 percent in 2021, an impres - sive increase compared to 2019’s teleworking rate (4.6 percent). The self-storage sector has been responding to the metro’s cur- rent demand for additional space, as 2021’s estimated deliveries are equivalent to eight percent of 2020’s inventory, or about 5M square feet of self-storage. The strong construction trend is in line with 2020’s evolution. In fact, NYC registered the highest self-storage construction in 2020 among the largest markets, with over 3M square feet of self-storage added to the local pipeline. •
COMMERC IAL REV I EW : : 13
SUMMIT
APARTMENT INVESTING CONFERENCE 2 DAY, LIVE December 3-4 | Frisco, TX
"If you want to succeed in Multifamily Investing, then YOU HAVE TO GO TO THIS CONFERENCE! "
14 : : COMMERC IAL REV I EW
at a beautiful Dallas hotel and energetic professionals are flocking to the registration area of the FIRE Summit (FINANCIAL INDEPENDENCE RETIRE EARLY) hosted by Think Multifamily. If you had accidentally stumbled into this conference, you would look around and immediately conclude that everyone knows each other. It’s 7:30 AM and chatter is bouncing off the walls. Smiles and handshakes are within every square foot. The excitement is contagious! “This must be a giant family reunion or a large corporate party,” you’d say to yourself. But you’d be surprised to learn that this group, which prides itself on doing business with integrity and treating their members like family, is comprised of people from all walks of life and all over the world (as far as Israel) who have tapped into financial freedom. FINANCIAL FREEDOM IN THE NEXT 3 YEARS , is one of Think Multifamily’s philosophies and their FIRE Summit , an annual event, revolves around helping individuals achieve that through multifamily real estate investments. While they’re not the only firm finding success through group purchasing of 100+ unit apartment buildings, the word is, they are the most authentic and available in the biz. Ask Founder, Mark Kenney, what makes Think Multifamily different, and he’ll simply say, “We’re obsessed with your results.” Co-founder and wife, Tamiel Kenney, concurs and adds, "We truly believe helping others is vital to our own success." AS EXPERTS AND INDUSTRY LEADERS, Mark and Tamiel admit they made a lot of mistakes in the beginning. Without a group like the one they’ve established, they had to live and learn from their choices and challenges. Today, they want to help others Go BIGGER, FASTER in multifamily investing by avoiding the pitfalls that so many without support fall into. THE FIRE SUMMIT draws hundreds of attendees as well as about a dozen guest speakers and subject matter experts. Topics like, “14 Steps to Apartment Investing” and “The Ins and Outs of Multifamily Financing,” give you an idea of how comprehensive the education provided is. In short, anyone who wants to get into or grow in multifamily investing has a place at this conference. MARK AND TAMIEL promote multifamily investing as the fastest way to achieve your goals no matter what they are. They foster a family environment for their investors where personal attention is paid, knowledge and assistance are readily available, and everyone’s progress is nurtured and celebrated. There’s no lack of proof that Think Multifamily is changing lives. (One example - a 27 year old who completed 4 deals and made over $100,000 within his very first year, which allowed him to quit his job.) TRANSPARENCY is a recurring theme amongst the group and its leaders. The information revealed in FIRE Summit teachings is abundant and invaluable. Unlike typical training seminars, FIRE Summit hosts address and encourage audience questions throughout the event. Case studies are broken down and properties analyzed. Additionally, FIRE Summiteers hear from ACTUAL Think Multifamily investors and students as they discuss, in detail, REAL deals and MEASUREABLE profits. IT'S A SUNNY SATURDAY MORNING
THE NEXT FIRE SUMMIT is just around the corner on December 3rd and 4th at the Embassy Suites and Conference Center in Frisco, TX.
COMMERC IAL REV I EW : : 15 IF YOU'RE READY TO CHANGE YOUR LIFE and secure your future through multifamily investing, CHECK OUT THIS YEAR'S FIRE SUMMIT AND RESERVE YOUR SEAT NOW AT THINKMULTIFAMILY.COM/FIRE.
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