HOUSTON–Panelists at the Multifamily Focuspanel at RealShare Houston agreed that the entiremultifamily market is changing in a number of ways.

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“The market is smoking hot,” said moderator ScottZiegler, senior principal at Ziegler Cooper Architects.“It's on fire and it's showing itself in all the differentdirections of the city.”

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The market's demand is partially due to the larger number ofpeople actively looking toward multifamily housing options oversingle family homes. Ziegler said they estimate 30% of each 100,000new residents will opt for multifamily housing.

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For tenants, there is a serious move toward 24/7 urbanlifestyle centers, which impacts what developers arecreating. Residents want to be able to live, work and play in thesame area – tending to socialize in smaller communities,gravitating toward the same restaurants, clubs and publicplaces.

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“Development will continue to be driven by consumers and howthey lead their life; both their work life and their leisure life,”said Kerry French, senior vice president andmanaging director at NorthMarq.

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This desire is beginning to create cities within cities, saidJeremy Edmiston, vice president of Pinnacle Familyof Companies.

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While tenants are attracted to the mixed-use lifestyle centers,Ziegler said the projects add complexity on the development side aswell as require a much larger scale in capital.

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In addition to the move toward lifestyle centers, tenants,especially the millennials, are also interested in smaller unitswithin amenity-rich buildings. They are also tending away fromgarden-style centers and more toward high-rise structures.

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Edmiston said the millennial tenants “will allocate more moneyto living where it's cool so they can be cool.”

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Over the years, the design of multifamily housing projects haschanged. French said, he is amazed at how multifamily has changedfrom basic shelter to amenities like rooftop entertainment centers,dog park services, fitness centers and more.

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With the increased demand and the amenity-rich new constructionprojects, rental rates in the market have continued to rise.Jeffrey Fript, associate vice president ofinvestments for Marcus & Millichap, said there is an increasinggap between class B and class C buildings that were constructed inthe 1970s and 1980s and the new class A product.

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The popularity of this property type is also bringing in capitalfrom around the world, according to Todd Marix,senior managing director of HFF. “Capital is excited to be here,”he said. “The track record is superb. We feel like this market haslegs.”

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