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Special Reports
Technology in Apartment Living: Are We as Smart as We Think?

During the latter half of 2016, the National Apartment Association (NAA) conducted a nationwide amenity survey. Apartment community owners and operators were supplied with a list of 43 amenities and asked which ones they had upgraded or added during the previous two years. Of these amenities, five could be described as “smart” and even those might be subject to debate today: High-speed internet, community-wide Wi-Fi, alarm systems, energy-efficient appliances and the catch-all “smart home devices.” Only energy-efficient appliances made the top 10 for most popular unit amenities. Smart home devices placed 18 out of 22 unit-specific amenities.

But how much has changed since then? Perhaps the most glaring transformation is how many of those amenities are now touched by technology. Package holding areas placed in the top 10 for community-wide amenities, but it would be quite a stretch to label them “smart” back in 2016. And who needs a grocery store on the premises when you can use an app to get your groceries delivered to the cold-storage lockers in your community?

Advances in technology are a challenge to keep up with, our members told us in a recent survey about smart home technology. An inherent challenge of smart homes seems to lie in its very definition, which means different things to different people. Back in 2016, Coldwell Banker Real Estate and CNET announced their official definition: “A home that is equipped with network-connected products (aka “smart products,” connected via Wi-Fi, Bluetooth or similar protocols) for controlling, automating and optimizing functions such as temperature, lighting, security, safety or entertainment, either remotely by a phone, tablet, computer or a separate system within the home itself.”(2) Suppliers to the apartment industry generally include the Internet of Things (IoT) in what they consider smart home tech. Regardless of the actual definition, apartment residents agree that it makes their lives more efficient. NAA surveyed apartment owners and residents to find out what role smart home tech plays in their communities.

In this report, you will learn:

  • Technology in Apartment Living
  • Owners are Testing the Waters
  • Owner/Operator Profile
  • Wary but Curious Residents
  • Resident Profile
  • Getting Smarter in the Future

Full Report

August 6, 2019
Smart Home Apartment
Special Reports
The Transformation of Parking

Multiple factors are converging to disrupt everything we know about parking: Its physical structure, format, design, cost and, perhaps most important, demand. The urban revival leading to a reduction in the need for parking, electronic vehicles, autonomous vehicles and the sharing economy as it relates to auto use will all have major impacts on parking. Apartment community developers, owners and operators who are not yet addressing this in their business plans will find themselves missing opportunities for operational efficiencies and maximizing revenue sources.

Before looking ahead, a look back will reveal changes already underway.

Parking Ratios

Most metro areas across the U.S. experienced a decrease in ratios from 2006 to 2016.

After rising consistently through the decades, the 2010s witnessed a decrease in parking ratios in newly constructed buildings across the United States. Average parking ratios for apartment properties with 50 or more units peaked at 1.62 in the 2000s before declining to 1.46 in the current decade, its lowest rate since the 1960s. This major shift coincides with the ongoing apartment boom of the current business cycle and reflects the increasing urban nature of residential development versus the overwhelming suburban character of residential developments in decades past.

More recent changes reveal that the parking ratio average for garden apartments has declined slightly from 1.68 in 2006 to 1.62 in 2016. Similarly, the ratio for mid-rise buildings also declined from 1.35 to 1.27 during the same period. However, the ratio for high-rise buildings has risen slightly from 0.87 to 0.93, illustrating the fact that while changes are clearly underway, the societal car-centric nature remains strong and major shifts in attitude might take decades to play out in the data.

When analyzed by metro area, parking ratios were typically higher in the Sunbelt and lower for markets in the Northeast, upper Midwest, and Pacific Northwest. Developments in large Sunbelt metro areas originally required apartments to have more parking because of fewer public transportation options compared to their northern and western counterparts.

+0.14 Largest Increase in Parking Ratio - Nashville, TN
-0.84 Largest Decrease in Parking Ratio - Miami, FL

Differences in zoning regulations and existing density, as well as the age of buildings, also played important roles in this disparity. With the advent of ride-hailing as well as multiple modes of transportation options, the differences among regions will begin to wane. In fact, most metro areas across the U.S. experienced a decrease in ratios from 2006 to 2016, although a handful of markets like Nashville, Philadelphia, Austin and New York City saw slight increases.

The steepest decrease in the average ratio occurred in the Miami/Ft. Lauderdale market, falling from 2.53, the highest of any major market in 2006, to 1.69 in 2016. This is mainly a result of the city eliminating minimum parking requirements, first for its downtown district in 2010 and then for developments outside of downtown comprising less than 10,000 square feet in 2015. The Portland market experienced the second largest decrease, with its average ratio falling from 1.50 to 0.90. With the city council having eliminated minimum parking requirements in 2017 for developments located near frequent transit and containing affordable units, further declines can be expected for the area’s average ratio.

Parking Structures

20.6 percent of new properties had multi-level structure parking in 2017.

The types of parking available at apartment properties have become substantially more diverse in recent decades. While the vast majority of properties (over 90 percent) constructed from the 1940s to the 1990s offered grade-level parking, in line with the dominance of the automobile-oriented lifestyle and suburban development patterns, the percentage of new properties with grade-level parking has decreased significantly to 61.5 percent in the present decade. Not surprising, other parking types have become more common given the surge in urban developments and inherent lack of available land.

As of 2017, the share of new properties with multi-level structure parking, the second most popular type, was 20.6 percent, while a mix of above-ground and subterranean parking stood at 12.1 percent. In conjunction with decreasing parking ratios, the recent diversification of parking types available on apartment properties is further evidence of the increasingly diverse and urban nature of apartment development and design, even those located outside the city center.

73 percent of apartment properties with car charging stations built within the past ten years.

The number of newly constructed apartment properties with car charging stations steadily increased through much of this decade, according to data from CoStar. This trend is expected to continue given the surge in mainstream popularity of electric vehicles beginning in the early 2010s and mass-produced offerings from brands like Tesla, Nissan and BMW. Charging stations have clearly become a more popular community amenity for apartment developers looking to attract residents with specific lifestyle preferences.

As expected, data suggest properties with charging stations are larger – typically containing 50 or more units – newer, and higher-end. About half of the properties contain 250-499 units and nearly 85 percent are considered 4- or 5-star, the most akin to a class A/A+ rating, according to CoStar.

Rent Premiums

Americans still love their automobiles...and are willing to pay for it.

Apartment residents are willing to pay more for parking, a testament to the fact that Americans still love their automobiles. Data provided by Enodo, Inc., a real estate predictive analytics company, for selected cities across the U.S. reveal premiums ranging from just over 1 percent of average monthly rent to nearly 5 percent.

Unlike other amenity premiums, which often have an inverse relationship to the availability of that amenity in any given market or submarket, the cities that came out on top with the highest premiums are not necessarily those with the lowest parking ratios. In fact, Indianapolis boasts the highest rent premium for parking garages despite being in the middle of the pack for parking ratios among other areas. Other cities that are on the higher end of rent premiums span a variety of regions, including Houston, Orlando, Philadelphia and Chicago. Rent premiums for parking garages are lowest in New York and San Francisco, which have some of the lowest parking ratios; additionally, public transit is abundant and rates of car ownership are low.

Vehicle Access

The decreasing popularity of vehicle ownership among Millennial renters is something to consider in future parking plans.

The number of vehicles available to renters saw an uptick from 2006-2016, according to the U.S. Census Bureau. Nevertheless, the portion of renters ages 15 to 34 with vehicles has decreased from a peak of 33.7 percent in 2009 to 30.7 percent in 2016. The decreasing popularity of vehicle ownership among Millennial renters is something to consider in future parking plans, especially if this downward trend persists.

The share of renter-occupied households with no vehicle access decreased from 19.9 to 18.3 percent from 2006 to 2016; the share of renter-occupied households with one vehicle also decreased from 47.4 to 45.5 percent during the same period. At the same time, the percentage of renter-occupied households with two, three or four vehicles all increased. Since the number of vehicles per renter remained fairly steady during the past ten years, these changes reflect the increased popularity of roommate living arrangements.

The national rate of renters per household has increased from 2.41 in 2006 to 2.53 in 2016. It’s also important to note that these data encompass all rental households, including single-family rental housing that are more likely to be located in areas dependent on automobiles.

Renter Mobility

Of those who plan to purchase a car at some point, over 25 percent have an electric or hybrid vehicle in mind.

The National Apartment Association (NAA) surveyed more than 2,000 residents living in rental housing of all types at the end of 2017 to get their thoughts on car ownership and general mobility. About 35 percent of respondents were between the ages of 18 and 29, followed by 33 percent between 30 and 44 years of age. More than 52 percent described their residence as being in either an area that was urban or had an “urban feel,” with another 33 percent identifying as suburban dwellers. About 27 percent have one or more children under the age of 17 living in their households.

The majority, 75 percent, owned or leased at least one vehicle, only 5 percent being electric or hybrid. Of the respondents who do not own a car, 34 percent of them plan to never own one, followed by 26 percent who say it’ll be at least three years before they can purchase one. Of those who plan to purchase a car at some point, over 25 percent have an electric or hybrid vehicle in mind.


As expected, a majority of those (73 percent) who don’t plan to own a car cite costs as the strongest influence: Car payments, maintenance and insurance. But right on the heels of that reason (67 percent) is simply not needing or wanting one. Breaking this down by age group reveals that one in five renters between the ages of 18 and 34 expect to never own a car. Over half of the “never own” group describe their communities as “urban”, with nearly half living in New York, New Jersey, Connecticut or on the West Coast. Fifty percent walk to where they need to go five or more times a week; 24 percent use public transport at that same rate. Parking was available for 71 percent of respondents, over half of which was reserved parking. Seventy-one percent of residents report that there is no fee for these spaces, while about 15 percent report a fee of $100 or less per month. This is in line with
NAA’s Survey of Income & Operating Expenses, which showed an average fee of $93 per unit with mid- and high-rise properties charging significantly more than garden-style properties.

Apartment communities that offer incentives to residents for using ride-hailing services such as Uber or Lyft are still relatively few, according to our survey. Just three percent live in communities that offer this, although another 20 percent report they are unsure whether this is available.

Unsurprising, given the extent of car ownership among the survey respondents, using one’s own vehicle is by far the most common means of getting around, with 70 percent reporting using it often (five or more times per week). The next most common way of getting from place to place is walking, at 26 percent. Although public transport handily beat out ride-hailing in terms of use reported as “often,” adding the regular use category (four or more times per month) moved it closer, 11 percent versus 19 for public transportation.

The Affordability Factor

Few would argue that the cost of parking negatively affects housing affordability given both the cost to build a housing structure and the fact that local jurisdictions often mandate a minimum number of parking stalls. Estimated costs to build parking vary widely, but the Terner Center for Housing Innovation at the University of California, Berkeley estimates price tags of $30,000 to $75,000 per space, depending on the market.1 Type of parking also greatly influences the cost, with surface parking the least expensive, and underground parking the most.

An increasing number of cities have begun to reduce and even eliminate parking requirements for development. The chart below illustrates just a sample of the more recent changes to zoning codes in various municipalities across the country. In addition, cities such as Boston and Nashville are already building parking structures that can easily be converted to other uses.2

Strong Towns

Strong Towns, a 501(c)3 nonprofit media organization, created a map of cities that have reduced, or are considering reducing, parking minimums. Although the original map launched in 2015, it continues to be updated on a regular basis via crowd-sourcing. It’s important to note that these data are not independently verified, but many of the contributors are local planning or transportation officials or are affiliated with other “smart growth” organizations.

View Map

Looking Forward

Studies on myriad aspects of parking by a variety of stakeholders are abundant, and there is no shortage of predictions on its future. According to Green Street Advisors, parking needs will be cut in half over the next 30 years, to the tune of 75 billion square feet.14 RethinkX, an independent think tank, forecasts a decline in vehicle ownership from 247 million currently to 44 million by 2030, but makes a major assumption that autonomous vehicles will receive regulatory approval by 2020.15 Recent setbacks in autonomous vehicles’ progress, including accidents, make this assumption seem highly unlikely.

The architecture firm, Gensler, calculates a reduction in parking’s footprint from 25 percent for above and below-grade parking to up to 100 percent for surface parking16, that is, the potential to be completely eliminated; and also believes car ownership will peak in 2020 and decline thereafter.17

Gensler is already advising its clients to build parking that can easily be converted in the future. It comes at a cost, however, which is typically 15-20 percent higher. Design alterations include flat floor plates and higher floor-to-floor-heights, both of which lend themselves to conversions to several other use types.18

For the vast majority of apartment communities, removing parking altogether is clearly not an option at this point in time, as many residents own vehicles and lack of parking is a deal-breaker. Taking steps to move away from dependence on parking, however, makes sense given the trends already evident and likely to continue in the future. Perhaps more important in the near term is the ability of property owners and managers to provide their residents with access and support for multiple modes of transportation.

In the public and private sectors, more and more emphasis is being placed on managing demand rather than managing supply. The U.S. Department of Transportation defines demand management as “providing travelers with effective choices to improve travel reliability.”19 Products like TransitScreen®, which provide real-time arrival and departure times for subways, buses and commuter trains, are becoming more common in lobbies. Offering discounted transit passes and providing shuttles to transit stops also encourage public transit use.

Communities that are already offering incentives for ridehailing may need to strengthen their marketing material, given that one in five survey respondents was unaware of whether this was available. Dedicated drop-off and pick-up locations are becoming more commonplace and make it easier for residents to use these services.

While walking topped biking among our survey respondents, offering bike storage and bike sharing have the added benefit of promoting wellness. Using Redfin’s WalkScore ® is an easy way to get a quick snapshot of walkability at the property-specific level.

Like any operations decision in the apartment industry, planning for parking’s future will be asset-driven and highly dependent on location. There is no “one size fits all,” but organizations that consider the complete transportation picture in all of its varied and emerging forms, as well as understand the value of flexibility, will have a clearer vision of one of many disruptors in the industry.

Download the Full Parking Survey Report


Sources

  • The Resident Mobility Survey was conducted by NAA Research in late 2017 with 2,179 completions from residents in rental housing of all types across the U.S.
  • Yardi Matrix: Historical data for parking ratios and parking types, 50+ unit market-rate properties
  • CoStar: Historical data for car charging stations; average rents for selected metro areas, 50+ unit market-rate properties
  • Enodo, Inc: Rent premium data for apartment properties in selected metro areas; 50+ unit market-rate properties
  • U.S. Census Bureau, American Community Survey, 1-year estimates: Vehicle access by tenure and age
  • Strong Towns: Crowd-sourced map of changes to minimum parking requirements across the U.S. Strong Towns is a national nonprofit media organization whose mission is to advocate for a model of development that allows America’s cities, towns and neighborhoods to grow financially strong and resilient. ​​

Notes

  1. Graham McDonald, “The Effect of Local Government Policies on Housing Supply,” a study conducted for the Terner Center for Housing Innovation at UC Berkeley, May 2016
  2. Arcadis, Inc., HR&A Advisors, Inc., Sam Schwartz Consulting, LLC, “Driverless Future: A Policy Roadmap for City Leaders,” March 2017
  3. How Seattle’s New Law Would Change Parking Requirements
  4. Arlington County Reduces Parking Requirements for Multi-Family Developments on Metro Corridors
  5. A Map of Cities that Got Rid of Parking Minimums
  6. City of Oakland Library
  7. “Science Deniers” on City Council Drag Denver Backward By Requiring More Parking
  8. Parking Minimums Effectively Repealed In Portland – What’s Next?
  9. Buffalo Becomes First City to Bid Minimum Parking Goodbye
  10. Parking Requirements Will Be Reduced in a Huge Chunk of NYC
  11. Miami's Parking Deregulation Will Reduce Housing Costs
  12. Changes to Parking Requirements Made Big Impact on Minneapolis
  13. Divis Planning 101: Zoning Changes Explained
  14. Dave Bragg, Stephen Pazzano, “The Transportation Revolution: The Impact of Ride-Hailing and Driverless Vehicles on Real Estate,” Green Street Advisors’ presentation at Urban Land Institute Fall 2017 Conference.
  15. James Arbib, Tony Seba,“Rethinking Transportation 2020-2030,” report for RethinkX, May 2017
  16. Transitioning Building Design to a Future of Compact, Driverless Cars
  17. When car ownership fades, this parking garage will be ready for its next life
  18. The End Of Parking Lots As We Know Them: Designing For A Driverless Future
  19. Transportation Demand Management
July 20, 2018
A bird's eye view of cars in a parking lot, with the middle parking spot empty
Special Reports
Barriers to Apartment Construction Index

July 2020 Update: In 2020, four cities were recast, mainly due to lack of geographical dispersion of responses in the 2019 survey. See individual market updates below for Boston, Chicago, Portland and Seattle.

Affordability is a complex issue and can be driven by diverse factors including income levels, land and natural resource availability, population growth and housing supply-demand balances, among other issues.

The National Apartment Association conducted a national survey to better understand factors that impact new supply of apartments. The survey measured development complexity including the impact of community involvement, construction costs, affordability issues, infrastructure, density & growth restrictions, land supply, environmental restrictions, approval process complexity, political structure complexity and time to develop a new property.

Metro areas are ranked by relative ease of developing new apartments, however the intent of this study was to provide data to identify differences in land management and to provide a more holistic and fact-based review of best practices and factors that impact housing availability and affordability. The index rankings are not intended to apply judgement as to whether these policies are either good or bad.

Key takeaways from the survey findings:

  • In addition to the importance of land availability, input from local citizens significantly influences development.
  • Rising land and labor costs are inhibiting the production of affordable housing.
  • Complex approval systems are correlated to affordability issues.

We hope this report provides facts and focus for local discussions by rental housing advocates, both public and private. The tide of sustained rental demand and challenges to meet this demand must be addressed by those who can influence policies at the local level with cooperation from residents, policy makers and developers towards mutual goals.

Download the Complete Report

Download Original City Rankings Download 2020 Rankings

Download the individual reports:

Albuquerque

Atlanta

Austin

Baltimore

Boston

Charlotte

Chicago

Cincinnati

Cleveland

Columbus

Dallas

Denver

Houston

Indianapolis

Los Angeles

Miami

New York City

Orlando

Philadelphia

Phoenix

Portland

Salt Lake City

San Diego

San Francisco

Seattle

Sioux Falls

St. Louis

Tampa

Washington D.C.

For more information, including background and methodology, please contact Paula Munger, Director of Industry Research & Analysis. 

April 23, 2019
The top of an apartment building under construction, with cranes against a blue sky
Apartment Market Pulse
Rents and Occupancy Stabilize Thanks to Fewer Deliveries and Tight Housing Market

Although the national apartment market was stagnant during the end of 2016 and beginning of 2017, market fundamentals improved during the second quarter. A tight for-sale housing market, combined with slowing apartment construction activity and favorable demographic trends, portend a generally healthy balance of supply and demand. 

U.S. Apartment Market 
After a stagnant first quarter performance, most metro markets saw modest rent growth and stabilized vacancy rates in the second quarter. The national rent growth rate has also stabilized, measuring 3.6 percent annually, according to RealPage. The Western markets of Sacramento, Seattle and Riverside-San Bernardino led the way. Unlike previous quarters, the San Francisco Bay Area has finally begun to show signs of recovery, with the San Francisco, San Jose and Oakland submarkets all posting increases above 1.0 percent. Houston, however, continues to experience rent decreases, although the rate of decline has begun to abate as the energy slump slowly dissipates.

While an onslaught of new construction dampened occupancy rates in fourth quarter 2016 and early 2017, conditions improved during the second quarter. Data from RealPage indicated national demand for more than 175,000 units, far exceeding the 86,431 units completed. Nevertheless, the market is still working through the glut of apartments from the two previous quarters, with occupancy now sitting at a still-healthy 95 percent. This is down slightly from the 95.3 percent a year prior.

Market Pluse Q2Apartment Construction starts

According to the Census Bureau, there were a total of 284,000 multifamily unit construction starts nationally in May, a substantial 25.7 percent fall from the previous year. On the other hand, 52,000 more units were delivered compared to the same time last year, bringing the total number of deliveries to 335,000 units.

If we analyze the construction figures at the regional level, we see that multifamily starts declined in the Midwest (-67.6 percent) and South (-33.9 percent), while increasing in the West by 8.3 percent and Northeast by 29.7 percent. Deliveries fell in the Midwest (-50.8 percent), while jumping dramatically in the Northeast (158.2 percent) and increasing in the South by 21.3 percent and West by 19.1 percent. Going forward for the rest of 2017, it will be interesting to see how the variation in deliveries by region will shape rents and occupancy, especially in the Northeast.

U.S. Capital Markets
According to Real Capital Analytics, closed transactions for apartment property sales totaled $145 billion for the 12 months leading up to May, down 8.1 percent year-over-year. More than a million units changed hands during the same period, a decline of 9.2 percent. These decreases were expected, because of a combination of rising interest rates, some oversaturated markets, and continued uncertainties surrounding tax reform since the end of 2016.

Apartment Sales Volume

Foreign investment continued its descent from 2015, with volume down 55.3 percent from the year prior. Canada still constituted the largest share of foreign capital in the U.S. apartment market, although investors from Singapore were also fairly active. Investors seemed to favor a diverse selection of markets, including Sunbelt markets such as Austin, Phoenix and Miami, as well as larger urban locales including Chicago and New York City.

National Economy
The national economy added an impressive average of 193,000 jobs per month during the second quarter, an 18 percent increase from the same period during 2016. Unemployment remained historically low, standing at 4.4 percent as of June, the lowest recorded rate in 10 years. As the current economic expansion marches on as the third-longest in history, employers in some industries and markets are having difficulty filling vacant positions with qualified employees, spurring continued wage growth.

U.S. Q1 Wage Growth

Outlook
Looking ahead into the remainder of 2017, a tight for-sale housing inventory coupled with rising mortgage interest rates may sideline more potential homebuyers, thereby buoying apartment demand. This could help support healthy rental demand in the traditionally more-expensive Northeast and West Coast markets. The slowing in multifamily starts at the national level is good news for markets overloaded with luxury product, but puts further pressure on the highly-sought-after Class B/C sector.

Paul Yoon, Research Analyst, NAA

August 1, 2017
Rents and Occupancy Stabilize
Research Reflections
United States Needs 4.6 Million New Apartments By 2030 or It Will Face A Serious Shortage

To meet growing demand, America needs to build at least 4.6 million new apartment homes at all price points by 2030. In addition, as many as 11.7 million older existing apartments could need renovation during the same period. 

These projections come from a new study commissioned by the National Apartment Association (NAA) and National Multifamily Housing Council (NMHC) and conducted by Hoyt Advisory Services (HAS).

“It’s important to note that this number excludes the supply-demand imbalances already existing in some markets,” said Paula Munger, NAA’s Director of Research and Industry Analysis.

The study attributes this increased demand to:

  • The rise of young adults ages 18 to 34 as the largest generational demographic group and who are delaying homeownership; 
  • The aging population who are choosing the convenience of apartment living; and 
  • Immigration, which is predicted to account for about half of all new U.S. population growth through 2030.
  • Demand for apartments is at an all-time high as the number of renters has reached an unprecedented level. Nearly 39 million people in the United States — that is almost 1 in 8 — call apartments home. This demand:
  • Puts significant pressure on the apartment housing industry to meet their needs. 
  • Makes it challenging for millions of families nationwide to find quality rental housing they can afford at their income levels. Underlying the affordable rental housing shortage is an income problem.

Meeting projected demand means building more than 325,000 new apartment homes each year on average — a number the industry has not been able to hit for decades. From 2012 through 2016, the apartment industry built, on average, only 244,000 new apartment homes per year. The last time the industry built more than 325,000 in a single year was 1989.

Annual growth in renter households exceeded one million on average over the past five years, which is a record amount. Meanwhile, apartment vacancy rates as measured by RealPage Research fell or remained the same for seven straight years from 2009 to 2016.

At the individual Metropolitan Statistical Area (MSA), demand was ranked by both sheer number of apartment units needed as well as the percent increase of new apartments over the current stock. New York, Los Angeles, Dallas-Fort Worth, Chicago, Washington, D.C., and Houston each need over a half-million units over the next 13 years.

 

The fastest growing markets include Raleigh, Orlando, Austin, Charlotte and Las Vegas, each of which is projected to need apartments totaling 40 percent and greater of their current supplies.

“Even though we’re hearing about some markets potentially in an oversupply situation now, it’s typically occurring at the higher end of the market,” Munger said. “Keep in mind that we’re talking about apartments at all price levels, and that the research spans 13 years and even assumes two recessions.”

Net in-migrations, both foreign and domestic, are forecast to increase substantially in all of these cities, thanks to strong economies and healthy job growth. Professional services lead the growth with Raleigh and Charlotte also relying on their trade sectors, while Orlando continues to augment its leisure and hospitality sector. Austin’s growth is strong across most sectors, and even Las Vegas, historically reliant on the gaming industry, is showing signs of slowly diversifying its economy.

One main driver of future demand—immigration—is a hot topic in the media with reports of deportations and other crackdowns seemingly daily. As depicted in the chart, immigration is projected to slip below one million persons from 2017-2020 before picking up again in 2021 through 2030. Immigration comprising half of population growth is not unusual, and occurred during the 1990s.

As renting becomes more and more of a lifestyle choice, and not just an economic one, apartment demand will be driven by all age cohorts at every income level. Building 4.6 million new apartment homes by 2030 at all price points will go a long way in ensuring this demand is met.

Hoyt’s study covers an estimate for future apartment demand in the United States, the 50 states and 50 metro areas including Washington, D.C. The study defines apartments as units in buildings containing five or more rental units. The data and the Hoyt report, U.S. Department Demand—A Forward Look, are available at www.WeAreApartments.org, a website jointly owned by NAA and NMHC.

Study Ranks Cities Based on Their Ability to Add New Apartments

Honolulu, Boston, Baltimore, Miami and Memphis are the most difficult cities to add necessary new apartments, according to new research from Hoyt Advisory Services, commissioned by NAA and NMHC. The research examines and ranks 50 metro areas based on specific factors, including local regulations and the amount of available land to develop.

The research also shows that the easiest cities to build new apartments include New Orleans, Little Rock, Kansas City, Indianapolis and St. Louis.

The ranking, titled the Barriers to Apartment Construction Index, scores the metro areas along an index that reaches as high as 19.5 in the most difficult market to add apartments (Honolulu) to -5.9 in the easiest (New Orleans). While real estate is project specific, any score above the median of 1.8 means that it is harder to add new apartments than other metros.

There is strong correlation between the difficulty of adding new supply and affordability, as measured by the percentage of households spending 35 percent or more of their income on rent. Nearly half of residents in Miami, Honolulu, Riverside and Los Angeles are in this category, and these markets are some of the most difficult in which to add new supply.

June 30, 2017
New Apartments demand
Research Reflections
Demographic Double-Dipping

In addition to Millennials, Baby Boomers are a ripe demographic cohort for the renter lifestyle.

The imagery of sleek apartments offering a convenient, amenity-rich lifestyle is often thought of as being synonymous with Millennials. While there is no doubt that Millennials have impacted the way developers and property managers build and market apartments, demographic data show that Baby Boomers are seeking similar lifestyle accommodations in apartments. As the next-largest generational cohort after Millennials, Boomers offer an abundance of market possibilities the industry should not overlook.

According to the U.S. Census Bureau, the national homeownership rate currently stands at 63.6 percent as of the first quarter of 2017. While the homeownership rate for those aged 55 to 64 years now stands at 75.6 percent, the second-highest among all age cohorts analyzed by the Census, it is considerably lower than the 78.6 percent rate recorded during first quarter of 2011. Considering the sheer size of the Boomer population, the steady rate drop over the past six years represents a substantial number of new renters in the market.

If we dig deeper, we find more evidence that renting has become more popular with Boomers. As of March 2017, a significant 32 percent of Boomers are no longer interested in ever owning a home, a substantial increase from 23 percent in January 2016, according to FreddieMac. In fact, for those who are already renting, 67 percent expect to continue renting for their next residence, reflecting a general satisfaction with the rental lifestyle. Both of these sentiments actually reflect a greater share than both Millennial and Gen X survey respondents. Furthermore, a whopping 78 percent of Boomers are very, fairly or somewhat willing to downsize to live in an urban area. This implies that empty-nesters, many of whom are now free from child-rearing duties, may respond well to apartment communities that offer a lifestyle centered around convenience and leisure.

In terms of financial power, FreddieMac’s survey data indicates Boomers are the most likely not to have any debt, while also being the least likely to live paycheck-to-paycheck. Again, this could mean developers and property managers should focus on marketing features and experiences to this group, rather than pure economics.

Another factor that makes apartment communities more appealing to Boomers is the opportunity for socializing. According to a joint study by Age Wave and Merrill Lynch, two-thirds of retirees say they want to live in a community with a diverse population. This indicates that conventional apartment properties have a strong ability to pull in older residents, especially if they offer an appealing roster of community events and amenities geared towards fostering social connections for all types of residents.

It may be time to retire the stereotype of those aged 55-plus holding onto their owned homes for life, or retiring to quiet, secluded places. The generation known for defying convention may be redefining what they call home, and it may very well be in your apartment community.

May 11, 2017
, Special Reports
Adding Value in the Age of Amenities Wars

From helipads to breweries to concierge services that can just about read a resident’s mind, amenities have been a hot topic in the apartment industry for years, and the bar just keeps getting higher. For apartment owners and operators who have neither the capital nor even the demand for these over-the-top features, there are plenty of ways to increase their communities’ appeal through amenities, many of which are simple to implement and require little up-front investment. This report seeks to identify top amenities in their communities: nationwide and in 11 selected cities, at both the community and unit level, and which ones have the greatest impact on revenue. An analysis of major renovations and their effect on rent and occupancies is also included.

This NAA Research study included 43 unique amenities, added or upgraded from January 2014 to September 2016. The universe of survey responses totaled more than 100,000 units in 35 states.

At the property level, half of the top 10 amenities added or upgraded since 2014 involve bringing people together — the community aspect of apartment living that is a draw to so many apartment residents. Clubhouses and common areas for socializing made the top five, with swimming pools, outdoor kitchens and play areas also proving popular.

Fitness centers remain a must-have in any community. Other amenities related to health and wellness such as bike storage, walking/jogging paths and fitness classes did not make the top 10, but were still fairly prevalent among the survey respondents. Despite the importance of community-wide Wi-Fi to many residents, business centers still outweigh it in terms of what owners are offering. Pet-friendly amenities rounded out the top five and ranged from pet-washing stations to off-leash dog parks.

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April 4, 2017

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