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Leading the way with impactful thought leadership in multifamily marketing, P11 had the privilege of engaging with Kimberly Byrum, the Managing Principal at Zonda Advisory and multifamily industry expert. We were eager to share her perspective on current topics that matter most now to the multifamily industry.

READ ON or WATCH THE FULL INTERVIEW. Either way, it’s great information!

 

WHAT WE LEARNED:

 

NEW ADMINISTRATION’S IMPACT ON MULTIFAMILY

 

“After the election, in December, I participated in a high-rise conference (in Miami), and people were giddy because of the new administration coming in. With the real estate background of the leadership, it felt like one of us (real estate) is getting in there. They know where our struggles are. They understand the housing situation and how to get deals done. Now, that excitement has waned somewhat. There’s still a lot of uncertainty in terms of what kind of footing we’re on economically.

At the 10,000-foot level, we’re seeing a ton of absorption. All of the units that are currently in the pipeline are getting absorbed.

But on the ground, there’s a lot of anxiety about concessions and competition. As a leasing associate, you have 21 pieces of traffic come in, and (the prospects) are looking at six or seven other places, so it’s certainly hard to bubble up to the top. So, closing has been really challenging. And we’ve seen a lot of pricing wars because we’re just head-to-head with five or six new communities that have a ton of great inventory people can choose from.

On the development side, there’s this uncertainty in the equity markets, because construction financing is more available as seen in all the NMDC surveys. So, the debt side seems to be solving itself, but the equity side is really what’s holding up a lot of new developments because they are looking for very strong returns. My fear is that when we get out to 2027, there will be no pipeline coming in the market, and rents will start to rise again as they did during the pandemic. We need more action on the predevelopment side for this not to happen again.

The Federal Reserve is going to be higher for longer. From the service provider standpoint, this is scary because how do you staff up? This will definitely keep us on a pause. But the good news is that markets are absorbing those units (especially at the 10,000-foot level) and getting back to par.

Hopefully in the next six months of 2025, predevelopment activities will start for 2026-2027, late 2026, and early 2027 deliveries. This is positive news. Yes, we’ve had to lower our rents, but we’re lowering our rents in most markets off of a 20% increase. Bringing them down 5% to 6% is not eating too much into what we gained during that Covid spike.

Everybody believes now is the time to start so that the climate emotionally is there. They are mentally very bullish. But the equity is not there yet. It costs a lot to develop a deal and get it through entitlements, and that is an investment that I think people are really on the sidelines waiting, to see how things go as the year progresses.”

 

IMPACT OF THE LOS ANGELES FIRES

“Nothing will make a housing market really tight like a natural disaster. Many of the people who lost their homes are families. What’s extremely important to note is we’ve never built enough housing in Los Angeles, but where we have built (multifamily) housing is downtown. It’s a great product, but it’s all targeting small households. And many of the people who lost their homes are families, two- or three-person households. And so, the new rental inventory that may be available is one and two (bedrooms.) So, you just can’t even help them. Maybe at the corporate level, they are trying to meet this need with furnished units. But again, a lot of that product is just not helpful for the larger households.

I personally think that Phoenix is going to benefit somewhat from, what has happened there. Certainly, the luxury home market because you can go buy a really great home, obviously not on the ocean, but you can get Camelback views and a country club membership for a pretty reasonable price comparatively. So, we might see more people moving into that luxury market in Phoenix, Paradise Valley, and Scottsdale.”

 

EMERGING MARKETS

“Unlike during Covid when there was a move to the suburbs, now I’m seeing a shift back to the urban core. That’s good news. Demographics-wise, Gen Z renters will fuel the demand.”

 

ON ACTIVE ADULT & BUILD TO RENT (BTR)

 

“It isn’t really multifamily and really isn’t senior housing. It’s totally different. The active adult motivation is a want, not a need. BTR has become an interesting asset class in Active Adult. A BTR cottage-type product will bridge the gap and attract the GenX generation. Active Adult BTR is going to be a very cool kind of crossover product. I talk a lot with people in this space about this because Gen Xers do not consider themselves Baby Boomers. And I actually saw a really funny reel that was like, “I’m a Gen X grandma,” and she had on a Guns N’ Roses t-shirt. It was so great because it’s so true. The multifamily industry has to find out how to market effectively to Active Adult Gen X.”

 

IN CLOSING

A special thank you to Kimberly for the inside scoop on what’s currently happening and what’s to come. It’s always a delight connecting with you! Trust P11 to lead the way with strategic content like this so crucial about the multifamily industry.

Let P11 create custom content for you to engage your audiences more across platforms. Check out our video solutions, which are a vital part of every successful marketing strategy. Contact us now for more information on how to amplify your multifamily communities today!