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Multifamily Roundtable Q and A


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I participated in a Multifamily Roundtable discussion the other day as a Market Expert, here are the questions I was asked and my answers to the questions.

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Multifamily Roundtable Q and A

  1. 1. Multi-­‐Family  Roundtable  November  10,  2010  Question  and  Answer  Session  Roundtable  Discussion  Leaders:  Alan  Kolar-­‐  Mill  Creek  Residential  Trust,  LLC  Gregg  Logan-­‐  RCLCO  -­‐  Robert  Charles  Lesser  Randy  Anderson-­‐  UCF    Daryl  Spradley-­‐  Charles  Wayne  Stephanie  Brown-­‐  Riverstone  Residential  Discussion  Questions:  QUESTION:    “Two  demographic  groups  with  increasing  influence  are  the  Generation  Y  (born  between  1981  and  1999)  and  WINKs  (Women  with  Incomes  and  No  Kids).    How  will  these  two  groups  impact  the  multifamily  industry  in  Orlando?”   GREGG: “Gen Y First - WINK are a subset of Gen Y so let me address Gen Y First. i) 78,000,000 Gen Y nationally (1981 to 2000) (1) Between 2008 and 2020 57 million will reach age 22, beginning of prime rental age (2) So far, more are going in to existing rental properties, renovated properties and some in new but non-luxury properties due to issues of affordability. Also competition with condo’s and other properties available for rent due to over-supply on the for-sale side. (3) Have been hit hard by the economy – many have moved back home with mom and dad, and those in apartments have at least one roommate, often more; as economy improves and they “Un-Pack” this will have a very positive impact on rental demand. (a) So far due to economy, Gen Y’s not yet having the impact we expect. But it’s coming. (4) Long term demand looks very good in terms of demand for new product, for the next 10 years (5) Central Florida, about 677,752, age 10 to 29 currently; they enter the market over a 19 year period, so it’s a sizeable impact that should equate to demand for over 10,000 units annually on average (a) Of those of rental age, fairly split between urban and suburban areas
  2. 2. (b) Our research has shown strong interest in places with urban amenities among this group, BUT important to note that they split about 60%/40% in terms of urban versus suburban preference (i) The point is MORE Urban demand than in the past, but lots of demand for Suburban in the right locations, ie close to restaurants and shopping and employment – they want to live where the action is, which is mitigated by what they can afford – right now they are making compromises due to what they can afford. (ii) They do like walkable places over driveable, mixed-use areas versus single use. (iii)Smaller better designed units and strong amenities – fitness centers, social pool area, internet café, gaming rooms.QUESTION:  “WINK’s  Women  Income  No  Kids,  in  their  20’s,  well  educated,  typically  earning  over  $50,000,  what’s  their  influence  likely  to  be?”   GREGG: ii) Delaying marriage, renter by choice, like walkable neighborhoods, accepting of smaller but nicer; want security iii) Care about your “Green Initiatives” even if they’re not going to pay you a premium for them. iv) Work life balance is especially important to them – want convenience. v) Like things like fitness centers, quiet sitting areasa, libraries, that you have a recycling center on site vi) Somewhat more urban and/or urban suburban oriented than Gen Y overall. vii) Select the property first, then the unit itself. viii) There are 423,000 Gen Y women in Orlando MSA; about 296,000 are potentially WINKS, childless and not married; that’s not income qualified.QUESTION:  “There  has  been  a  lot  of  focus  on  sustainable  design  and  “green  living”  by  the  media  and  local  municipalities.    How  important  are  “green  features”  in  apartment  homes  for  renters?    What  are  the  desired  features,  amenities  and  pricing  in  new  apartment  product?”   ix) GREGG: x) We did a national survey of Renters, and 45% told us that they care about the environment and will take actions and spend money to protect it.
  3. 3. xi) However in terms of what drives them to rent an apartment, Cost, Safety, Unit Features and Design, Proximity to Work, Proximity to Shopping and Entertainment, score a lot higher than “Green” features or attributes.xii) Only about 37% of renters connect their home with something that impacts the Environment, and therefore their choice about where to live. However, about 20% of renters say they’re interested in renting a “Green” apartment if they can find one. Younger renters in particular less likely to pay for environmental compatibility.xiii) We looked at “Me” Green versus “We Green” in a large survey of renters sponsors by several large Apartment Developers nationall. We found that “We green” components influence choice of community and length of stay for less than 15% of rentersxiv) “Me” Green includes Energy Savings - Energy-savings may influence choice of community for 25% of renters, but less than 10% of renters willing to pay more for an energy saving communityxv) Almost 20% of renters willing to pay more for a community that provides better indoor air qualityxvi) LEED may be industry standard for development community, but renters don’t know the brand. Energy Star on the other hand is well known and a benefit.xvii) That said, we believe our survey shows MANY opportunities for low-cost “greening” that address important motivating factors