Multifamily Construction Is Shifting to the Suburbs

Modern apartment buildings

About one-third of multifamily building has moved to low-density markets in the suburbs and exurbs, which are seeing populations increase faster than are city centers over the past year, the National Association of Home Builders reported during the virtual International Builders’ Show on Thursday. The suburbs have been outpacing higher-density markets over the last four quarters, following a trend evident in single-family home construction too.

During the pandemic, the property share of 50-plus, high-rise units are on the decline as low-density rental options and single-family rentals are on the rise as renters seek more space and less density and are growing leery of buildings requiring elevators and common spaces.

Two- to four-unit buildings will likely continue to grow in suburbs and outlying city areas.

Robert Dietz, chief economist of the NAHB, also noted an uptick in demand for single-family build-for-rent housing—a bridge between single-family homes and multifamily.

“There’s a window of opportunity for gains there,” Dietz says. “You do have people who want single-family structures rather than a high-rise, but they don’t have a down payment saved to own yet.” The single-family build-to-rent market has grown recently to about a 4% share of single-family starts recently. Dietz predicts that share to jump to between 5% and 6% over the next two to three years.

Dietz also predicts the stalling townhouse market from 2020 will eventually get revived, and possibly grow to a 15% market share over the next few years from its current 11%. Townhomes offer medium-density housing solutions that can cater to the middle class and offer lower-cost housing options to help meet the demand for lower price points of housing.

Multifamily Design Trends to Watch

Daniel Gehman with Danielian Associates in Newport Beach, Calif., and Walter Hughes, with Humphreys & Partners Architects in Dallas, offered some of their predictions on multifamily design and architecture trends going forward in a separate session during the 2021 International Builders’ Show, including:

Greater adoption of technology: More technology will help decrease touch points in units and common spaces and streamline leasing processes as well. For example, technology could fuel management applications and touchless options for doors could grow in common areas. Virtual reality and virtual tours could help in leasing units. Also, robots could be the future in delivering packages and groceries to tenants.

Home offices included in floor plans: As remote work grows, more buildings may create spaces or nooks for residents working from home. These home office spaces will need to incorporate privacy and natural light to appeal to tenants, the speakers said.

Infusing distance, light, and air: Multifamily units will look for more ways to have indoor and outdoor spaces flow together between common areas and individual units, such as the use of sliding screen doors. Developers also will look to improved ventilation in their buildings, and Gehman believes “posse pods” will catch on—communal spaces for gatherings of smaller groups of six or eight people in a building’s social areas rather than expansive clubhouses for big gatherings.

Greater sustainability: Multifamily buildings also likely will look to eco-friendly products and healthier building materials that can help them offer cleaner air in their units and also lessen utility costs. They may look to use solar panels or more water-saving features. Buildings also may look to adopt more recycling and composting programs.