Is Apartment Strength Helping the Sharing Economy?

LOS ANGELES—As more multifamily developments grow in city core areas, we're seeing more acceptance, usually tacit, of residents hosting their apartments on Airbnb or similar hosting services, Olive Hill Group's VP of corporate development and legal affairs Tim Lee tells GlobeSt.com. We spoke exclusively with Lee, along with MVE + Partners principal Matt McLarand; Kevin Mulhern, SVP, investment properties, multifamily, for CBRE; Michael Weiser, president of GFI Realty Services LLC; Philip Martin, VP of market research at Waterton; Julie Johnson, SVP and director of management services at Draper and Kramer Inc.; and Mitch Paskover, managing partner at Trion Properties, about some of the trends they're noticing in the multifamily sector. Stay tuned for a more in-depth feature on multifamily matters in the September issue of Real Estate Forum.

GlobeSt.com: What trends are you noticing in multifamily?

Lee: As more multifamily developments grow in city core areas, we're seeing more acceptance, usually tacit, of residents hosting their apartments on Airbnb or similar hosting services. Whereas a few years ago, building managements didn't really know what to make of Airbnb, the attitude has evolved to one of quid pro quo where if tenants are respectful other residents and use good judgment when deciding who and how often to host, then building management is willing to look the other way.

McLarand: A major trend that MVE is responding to in multifamily development is the desire to achieve higher densities in a cost-effective way via different construction typologies and methods. We are testing ways of realizing higher densities now that new building codes allow for an additional third layer of concrete to create eight-story, Type III-modified buildings. We are also exploring new ways to frame buildings to see if we can achieve similar high-density results. For example, we are designing a multifamily development in Irvine called Blue Bay, where we are looking to incorporate unique ideas behind the structural composition of the building that takes both of these approaches into consideration. We are always pushing ourselves to uncover innovative design solutions that allow us to deliver exceptional places that are successful for both our clients and the community. It's a balance between great architecture and great value.

Mulhern: Creating suburban housing that still feels somewhat hip and urban is an emerging trend. Eventually, the Millennials will want more space and start families, and they will be attracted to apartments that still feel “cool.”

Weiser: One of the biggest trends in office space is co-working, and that desire for community-oriented space is what's moving the needle on the multifamily side, as well.

Martin: A trend I do believe we are seeing is that residents and developers, more than ever before, are increasingly viewing apartments as a “home” rather than just a “rental.” Many apartments, especially within larger markets, simply offer a hard-to-replicate lifestyle in terms of affordability, location, amenities and mobility/flexibility. With the lack of available and affordable single-family housing in many markets and the often unbeatable lifestyle attributes of apartments, I foresee an increasing “average length of resident stay” in apartments, and a greater level of demand among older-age cohorts.

Johnson: Today, there is a really broad base of renters—it's not just people age 18 to 35. All ages are renting; therefore, one size does not fit all. Trends such as people renting for longer, holding off on buying and continuing to migrate to downtown locations are all shaping the next wave of multifamily development. We're also seeing new deals wherein developers are testing concepts such as micro units.

Paskover: Many investors and developers remain uncertain about oversupply in the multifamily market. In Downtown Los Angeles alone, an estimated 6,000 apartment units are expected to hit the market over the next five years. This fear of oversupply is driving uncertainty as to how long the multifamily market can sustain this growth. In certain markets, such as Santa Monica and Glendale that are dealing with over-development concerns and high traffic counts, there has been a halt on several large development projects. The Neighborhood Integrity Initiative, for example, has been proposed to limit new mega-developments in the greater Los Angeles area and reflects some of the pushback that developers are facing in the market.

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.

LOS ANGELES—As more multifamily developments grow in city core areas, we're seeing more acceptance, usually tacit, of residents hosting their apartments on Airbnb or similar hosting services, Olive Hill Group's VP of corporate development and legal affairs Tim Lee tells GlobeSt.com. We spoke exclusively with Lee, along with MVE + Partners principal Matt McLarand; Kevin Mulhern, SVP, investment properties, multifamily, for CBRE; Michael Weiser, president of GFI Realty Services LLC; Philip Martin, VP of market research at Waterton; Julie Johnson, SVP and director of management services at Draper and Kramer Inc.; and Mitch Paskover, managing partner at Trion Properties, about some of the trends they're noticing in the multifamily sector. Stay tuned for a more in-depth feature on multifamily matters in the September issue of Real Estate Forum.

GlobeSt.com: What trends are you noticing in multifamily?

Lee: As more multifamily developments grow in city core areas, we're seeing more acceptance, usually tacit, of residents hosting their apartments on Airbnb or similar hosting services. Whereas a few years ago, building managements didn't really know what to make of Airbnb, the attitude has evolved to one of quid pro quo where if tenants are respectful other residents and use good judgment when deciding who and how often to host, then building management is willing to look the other way.

McLarand: A major trend that MVE is responding to in multifamily development is the desire to achieve higher densities in a cost-effective way via different construction typologies and methods. We are testing ways of realizing higher densities now that new building codes allow for an additional third layer of concrete to create eight-story, Type III-modified buildings. We are also exploring new ways to frame buildings to see if we can achieve similar high-density results. For example, we are designing a multifamily development in Irvine called Blue Bay, where we are looking to incorporate unique ideas behind the structural composition of the building that takes both of these approaches into consideration. We are always pushing ourselves to uncover innovative design solutions that allow us to deliver exceptional places that are successful for both our clients and the community. It's a balance between great architecture and great value.

Mulhern: Creating suburban housing that still feels somewhat hip and urban is an emerging trend. Eventually, the Millennials will want more space and start families, and they will be attracted to apartments that still feel “cool.”

Weiser: One of the biggest trends in office space is co-working, and that desire for community-oriented space is what's moving the needle on the multifamily side, as well.

Martin: A trend I do believe we are seeing is that residents and developers, more than ever before, are increasingly viewing apartments as a “home” rather than just a “rental.” Many apartments, especially within larger markets, simply offer a hard-to-replicate lifestyle in terms of affordability, location, amenities and mobility/flexibility. With the lack of available and affordable single-family housing in many markets and the often unbeatable lifestyle attributes of apartments, I foresee an increasing “average length of resident stay” in apartments, and a greater level of demand among older-age cohorts.

Johnson: Today, there is a really broad base of renters—it's not just people age 18 to 35. All ages are renting; therefore, one size does not fit all. Trends such as people renting for longer, holding off on buying and continuing to migrate to downtown locations are all shaping the next wave of multifamily development. We're also seeing new deals wherein developers are testing concepts such as micro units.

Paskover: Many investors and developers remain uncertain about oversupply in the multifamily market. In Downtown Los Angeles alone, an estimated 6,000 apartment units are expected to hit the market over the next five years. This fear of oversupply is driving uncertainty as to how long the multifamily market can sustain this growth. In certain markets, such as Santa Monica and Glendale that are dealing with over-development concerns and high traffic counts, there has been a halt on several large development projects. The Neighborhood Integrity Initiative, for example, has been proposed to limit new mega-developments in the greater Los Angeles area and reflects some of the pushback that developers are facing in the market.

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.