The global pandemic has affected every aspect of life in America and across the world, the multifamily housing market is no exception. The impact of the pandemic is affecting every aspect of multifamily development from product design and selection, to getting deals done, to building management and operation.
Over the last decade, there has been a strong trend in young professionals flocking to the Twin Cities, especially to amenity-rich areas of Minneapolis like the North Loop and Northeast. With the onset of the pandemic, many of these professionals are now working from home and have limited high-contact extracurricular activities. This new way of life is resulting in an increased demand for additional flex space within apartment units. Whether it be in the form of additional bedrooms, in-unit offices, or flexible workspace amenities, these new space demands have a strong potential to change product offerings as developers evaluate projects.
Project evaluations and deal-making, like all traditional interactions, have also been forced to adapt to our changing circumstances. Social distancing and work-from-home orders have encouraged, if not forced, changes while putting together projects. Developers are using remote video and drone surveys to evaluate everything from site conditions to building envelope inspections. Like many traditional in-person interactions, the days of the in-person marketing of projects to partners and other key players are over as meetings have moved to a video conferencing format.
Unrelated to the pandemic, high taxes and costly land prices in Minneapolis has been a slow-moving trend in recent years as developers have sought more affordable land and lower taxes. While the Minneapolis market has remained strong, these factors combined with incentives such as suburban TIF and opportunity zones are making the first and second ring suburbs more enticing.
Managing tenancies has also changed over the past several months. Existing tenants are protected by a residential eviction moratorium leaving some multifamily property owners stuck with tenants unable to pay rent and unwilling to leave without recourse. Other landlords are struggling to get multifamily occupancies leased pushing concessions to renters in an effort to incentivize the signing of new leases. Many properties outside of high-demand neighborhoods are offering two or three months of free rent, discounted parking, and other incentives.
While changes in the multifamily housing market are the result of several factors and were in motion before the pandemic, the prospect of a lingering public health crisis well into 2021 and beyond will influence the direction of future trends. Join moderator Jake Steen (Larkin Hoffman) with panelists Brent Webb (Mortenson), Chris Osmundson (Alatus), and Josh Brandsted (Greco) on Wednesday, September 30th, at 2:30 PM for a Bisnow panel to learn how pandemic lifestyle changes are affecting the multifamily market.
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