What Isn’t Going Away Because of Technology?

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The increased availability and transparency of data has definitely changed the multifamily investment landscape for the better. That is according to Daniel Parker, managing director at Hodges Ward Elliott, who recently chatted with GlobeSt.com about technology’s role in investment in the apartment space.

For more information on real estate technology, join us at RealShare APARTMENTS in Los Angeles, CA from October 29-30, 2018. This year, GlobeSt.com and CRETech are coming together to present two highly engaging sessions that highlight cutting-edge technology solutions. These interactive and entertaining discussions will provide key takeaways and practical insights from top technology innovators and top adopters in the multifamily industry. To register for RealShare APARTMENTS visit: https://www.eiseverywhere.com/ehome/302312/653773/.

GlobeSt.com: How is tech playing a role in investment in the apartment space/?

Daniel Parker: Technology is impacting and disrupting retail, industrial, and office real estate, but we see the immediate impact on multifamily to be minimal.  Fundamentally, the demand for a roof over one’s head is not going away.  You might see “smart apartments” and owners investing in increased levels of technology to meet tenant demands, but the basic need for a place to sleep each night isn’t going away because of technology.  This increases the perceived long-term stability of multifamily demand in urban markets like New York.

On the other hand, the increased availability and transparency of data has definitely changed the multifamily investment landscape for the better. Tenant information and analytics around commutation, to work and play, often helps support and drive investment in multifamily housing. For example, we were able to aggregate taxi pick-up and drop-off data in South Williamsburg in Brooklyn for a client. After a thorough analysis of data spanning several years, we were able to illustrate the strength of the area as an emerging neighborhood with a slightly older, more financially secure renter commuting to the best office markets in Manhattan. This unique data ultimately convinced an institutional investor to acquire a major portfolio in this neighborhood.

GlobeSt.com: On renewed investment interest in the ‘missing middle’ and workforce housing.

Parker: Middle-class math in New York is simple: in 2018 a median income family of four earns about $100,000 per year.  Compare that to the median rental price for a Manhattan two-bedroom: more than $4,150 – implying a required annual income of over $165,000 to qualify.  Brooklyn isn’t much better with 2-bedroom units hovering over $3,000 per month and Queens is only slightly less expensive than Brooklyn.  For middle-class wage earners in New York City, the Bronx is the last viable option that remains affordable because a typical 2-bedroom is $1,800-$2,000 a month.  It’s no wonder that the Bronx has been experiencing the strongest population growth in New York City as droves of middle-class renters are finding it the last convenient place to live with affordable rents.  For investors seeking exposure to urban rental markets experiencing high levels of rent growth, the Bronx has been very interesting.  We’ve been on the front lines of the Bronx market and it is clearly attracting the attention of some of the largest institutions in US.

For more information on multifamily news, join us at RealShare APARTMENTS in Los Angeles, CA from October 29-30, 2018. This event attracts more than 1,000 of the industry’s top owners, investors, developers, brokers and financiers as they gather for THE MULTIFAMILY EVENT OF THE YEAR! This conference is powered by GlobeSt.com, the go-to-source for multifamily news and analysis. To register for RealShare APARTMENTS visit: https://www.eiseverywhere.com/ehome/302312/653773/.