COHN Takeaways on the State of Multifamily
The COHN team attended the National Multifamily Housing Council’s (NMHC) Strategy conference last week in San Diego to educate ourselves on the upcoming year in multifamily marketing. Meeting old friends, current clients, and (hopefully) some new client partners for COHN, we took in the action-packed 24 hours like water from a fire hydrant.
Here are a few of our key takeaways from NMHC Strategies, but we’d love to hear yours! Send us an email to catch up, and let’s compare notes from #NMHCStrategies2024.
1. Is that Cautious Optimism on the Horizon?
Depending on who was speaking, it was difficult to distinguish what felt like general positivity for the industry versus “well, could be worse.” That said, it seems safe to summarize sentiments by concluding that 2024 will be better than 2023 for everyone in multifamily.
Many of the speakers predicted several rate cuts this year, which should loosen up capital, and there will be positive downstream effects for the rest of us playing in the multifamily industry. Demand is still plenty high for multifamily, but that has led to some very competitive markets favoring renters. It’s going to be highly competitive, but there’s hope on the horizon.
2. AI, Tech and Continued Centralization
While access to capital is still limited, many leaders at NMHC Strategies focused on expense mitigation—primarily through new technologies and operational centralization. By shifting resources from the property level to corporate teams, large developers/operators have found massive efficiencies. Pairing this operational approach to efficiency with the power of AI, self-built platforms, new third-party products and services, and residents that increasingly appreciate/expect digital amenities and communication, there has been a seismic shift in how larger portfolio brands manage their assets.
One leader claimed they’ve cut on-site human capital by 54% in the last few years! This figure still is beyond eye-opening. Digital innovation is slowly removing the human element from multifamily.
3. Commoditization Creates a Demand for Brand Distinction
With some of the sharpest economists and industry leaders speaking throughout an action-packed lineup, NMHC Strategies was primarily a macro-level view of trends and forecasts for multifamily. As a result, most conversations focused on supply, demand, headwinds, tailwinds and market-by-market forecasts. You got the sense that many attendees see multifamily as a simple commodity that will trade/lease/sell based on market conditions alone.
We don’t see it that way; in fact, anytime a speaker referenced “heads in beds,” we kept wanting to talk more about the people in those beds. Clearly, the state of single-family housing and the economics of the housing market play an important role in how a prospect becomes a tenant at your property. But much, much more goes into consumer behavior than supply and demand.
In addition, not all tenants are created equal, and as the economists pointed to concerning statistics about re-leasing YoY, we wanted to talk about the power of brand loyalty built through brand strategy. In markets that have overbuilt and are saturated with supply, how do you think you will lease up those properties? What is your strategy for “heads in beds” but for markets stabilizing over time?
Brand strategy is the answer, and it’s how you win against competitors in the short, medium and long term. Developers/owners/operators who invest in their property brands will always lease up faster or re-lease more consistently than those who do not. That’s a fact, regardless of macroeconomic conditions.
4. What can Multifamily borrow from Hospitality and Retail?
The vast range of multifamily amenities only seems to be expanding, as the best-in-class properties are beginning to mirror hospitality entities or even retail properties. Amenities, convenience, distinction and community engagement platforms are all the rage for tenants, and as an agency that has spent decades in retail real estate, it wasn’t hard to draw comparisons between multifamily and retail.
While retail real estate has to evolve and innovate in the face of e-commerce through “experiential retail,” multifamily must continue to invest in understanding and enhancing the experience of tenants and community members.
There’s a lot to be gained in understanding best practices in hospitality and retail, particularly from the marketing perspective, and we’re looking forward to working with our clients in multifamily to better tell their experience story, property to property, to win the battle for better, more consistent tenants.