Technology features and affordable housing investment will be among the top trends in multifamily next year. Apartment investors are seeing increasing demand for in-unit technology features, like security systems and keyless locks, that can be operated from their personal smart phone. Likewise, the increasing supply and development of high-end class-A apartment buildings and the supply demand imbalances in housing have created substantial investment opportunities for rental product that is moderately priced.

While in-unit tech features have been available, tenants are now starting to demand them. “Technology continues to be important,” Mitch Siegler, senior managing director of Pathfinder Partners, tells GlobeSt.com. “We're seeing more properties with smart home features like electronic/keyless locks, camera/security systems, electronic thermostats, which can be operated from a smartphone. Adoption of these features is accelerating and many features, which are becoming standard in new homes are also migrating to apartments.”

For affordable housing, there is a limited supply of moderately prices housing options, particularly in Southern California. Value-add investors see a particularly attractive opportunities in this niche, because they have the experience to renovate and redevelop older apartment stock. “We believe there is a continued need for more affordable housing options,” adds Siegler. “There is a significant disconnect on the price that a new apartment costs today to build or buy and the pricing for 1970's and 1980's-vintage projects, which can typically be acquired for well below replacement cost.”

In addition, value-add opportunities are a way to bring new affordable supply to the market. “Given the high cost to build new product, the corresponding rental rates are also significantly higher, in some cases, double or even triple those being charged for older product,” adds Siegler.

Pathfinder's investment strategy—which it will continue to execute through 2019—is designed to take advantage of this demand. “Our current investment thesis is that as a direct result of this dichotomy, there is much more room for measurable rent growth with the older properties, especially after they are improved and modern amenities are added,” says Siegler. “More rent growth equals a greater return on our investments. With this in mind, we plan to acquire $100 million in value-add apartment properties in 2019.”