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  • Writer's pictureKevin O'Reilly

Key Takeaways: National Multifamily Housing Council (NMHC) Annual Meeting



The 2024 National Multifamily Housing Council (NMHC) Annual Meeting & Apartment Strategies Conference was recently held in San Diego, CA. The event brought together industry experts, thought leaders, and professionals to discuss the latest trends and innovations shaping the future of multifamily housing. Our directors of multifamily investment sales, Scott Nurski and Kevin O’Reilly, represented the NAI Great Lakes team.


These are their key takeaways.


24 Out of 24 For 2024 

Kevin & Scott held 24 meetings with institutional investors nationwide (among others with lenders, insurance providers and property management professionals). Of these 24 investment groups, each noted their intention to establish or expand their presence in West Michigan in 2024.


Optimism is Back! 

The prevailing sentiment is a stark contrast to the mood at last year’s conference. There is a growing sense of enhanced clarity regarding interest rates, pricing dynamics, operational expenditures (including insurance), and the equilibrium between supply and demand. On average, prices of multifamily assets are down by 20% since March 2022. Many variables must still play out, but the tone and expectations are generally positive.


“Negative Leverage No-Go” 

The consensus among institutional investors is to target deals with CAP rates in the upper 5% or 6%+ range but there are few sellers at those prices for well-located, institutional-grade Class A/B apartments. Buyers appear to acknowledge that anything priced more favorably is likely an older, more challenged asset in less desirable submarkets. It’s still unclear how much volume we'll see in 2024, but the expectation is more than 2023.


Interestingly, it was noted that national transactional volume for the multifamily sector in 2023 totaled $100 billion, marking a decline from the record-high of $220 billion in 2022. The trailing 10-year average stands at $140 billion annually.


The Cost of Construction Financing 

Interest rates are a significant challenge in most markets. Starts have plunged nationwide, equating to substantially less supply by late 2025 and into 2026-27 when an improved revenue outlook is anticipated. Construction loans are still happening, but at higher rates and lower loan-to-cost ratios, which means more equity is required.


No Systemic Distress 

Investors are becoming resigned to the fact that there will be little to no “blood in the water,” particularly among institutional-grade assets entering the market in 2024. There were some isolated distress stories shared in oversupplied markets, particularly in the Sunbelt region, where syndicators underwrote aggressively, causing “situational distress.” There is little to no distress in the multifamily sector in Michigan, and any distress witnessed relates to operational issues as opposed to any systemic shift in market fundamentals.


Heads on Beds 

This is the name of the game in many markets across the nation. Operators continue to give on price to maintain occupancy, given the 50-year high in completions hitting in 2024. Michigan is an outlier relative to most of the country insofar as the supply is limited, and rent growth continues at a clip of 3-5% in many markets. 


Fundamental Demand for Apartments Remains Strong 

As Jay Parsons from RealPage said best “Fundamental demand for apartments is strong and should remain strong,” though still short of supply in 2024. Improved consumer confidence, a resilient job market, plus wages outpacing rents all add up to robust demand. (And don’t give too much credit to high home prices and mortgage rates. Apartment renters who would have bought a house likely rented SFR/BFR instead).


Flexible and Adaptive Spaces 

The ongoing shift in work dynamics was another point of discussion among developers. The challenges and opportunities posed by remote work emphasized the importance of getting the right “amenity mix.” This means designing environments that adapt to residents' evolving requirements, including remote workspaces, fitness areas, and multifunctional common spaces.


Technology Integration for Enhanced Living 

The role of technology is shaping the future of multifamily housing. From management and leasing efficiencies to advanced security systems and digital amenities, the conference highlighted the growing importance of leveraging technology to enhance the resident experience. Attendees discussed the potential of artificial intelligence, the Internet of Things (IoT), and smart building management systems to optimize operations and improve overall tenant satisfaction.

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