• The growth in the gig economy, which encourages mobil- ity found in rentals and makes it more difficult to qualify for mortgages. • Trends in trans- portation, such as fewer young people with driver licenses and development of driverless cars.
which favors urban ar- eas and transit-oriented development suburbs. The study assumes that homeownership will continue to rebound. Millennials and Genera- tion X households have reached an age when their earnings will grow, many will pay off student debt and begin to have
than 300,000 per year. If that trend continues, occupancy rates can only be maintained under the most favorable demand and economic scenarios. It might take time, but metros with strong economic and population growth will ultimately absorb supply. Markets with educated workforces, attractive lifestyle amenities and healthy business climates are growing the fastest. Examples of these markets include Dallas, Houston, Atlanta and Charlotte. Orlando and Las Vegas are among the projected growth leaders, although those metros’ econo- mies are more fragile, being dependent on tourism, and by extension the economic health of the country. Don’t turn out the lights in core markets such as New York, San Fran- cisco and Los Angeles. Core metros remain critical as hubs of industry, and they remain aspirational landing spots for highly educated young workers and immigrants. Absolute numbers favor primary metros, even if percentage growth is higher elsewhere.
GIG ECONOMY: A labor market characterized by a prevalence of short-
term contracts and freelance work instead of permanent job opportunities.
children. That will start a search for better schools and more space to raise families. What’s more, rapidly increasing apartment rents make owning a home cheaper by comparison. CONCLUSION: DEEP INTO CYCLE, MARGIN FOR ERROR THINS Although there are uncertainties, some general lessons that seem clear: Demand will be healthy, but it is not unlimited. Our calculation forecasts demand for 135,000 to 145,000 multi- family units per year in the top 30 met- ros, which represent about two-thirds of the population and demand in the U.S. The recent trend in deliveries is more
• Commuting preferences, which could concentrate development in inner-ring suburbs. • Immigration policy. Immigrants tend to settle in big coastal markets. • Land use, increasing use of infill lo- cations for housing as opposed to far- flung suburbs. The cost of infill land has reached the point where develop- ment has become difficult for anything other than luxury apartments. • Preference for the live-work-play lifestyle with access to amenities such as restaurants and shopping,
> Continued on :: PG 97
Paul Fiorilla is the director of research at Yar- di Matrix, a leading commercial real estate research and data platformtailored specifi- cally to address the needs ofthe commercial
market industry. Learnmore at YardiMatrix.com.
58 | think realty magazine :: september 2018
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