2022 NMHC Conference Insights and Predictions
We began the new year by attending the 2022 NMHC Apartment Strategies Conference, which took place in January at the Hilton Bonnet Creek/Waldorf Astoria in Orlando, FL. The conference is the multifamily industry’s premier event, featuring exclusive networking opportunities with industry leaders and in-depth sessions on market intelligence and business strategies.
The conference began with the Chief Global Economist and Global Head of Research for CBRE highlighting the following:
Multifamily investments were at a 15 year high in 2021 – 400,000 multifamily units were delivered in 2021, and the same number is expected in 2022
He discussed 2022 Headwinds that were emerging:
Inflation is surging – Fed looks panicked.
The labor market is hot as ever, but workers are leaving the labor force faster than ever.
January’s COVID surge impacts all facets of the industry.
International threats like Taiwan and Ukraine situations could impact supply issues more.
China’s economy has run into trouble – if China enters a recession, we all do.
Conference attendees were also provided with predictions on how 2022 could proceed given the current industry climate:
Inflation will ease up in the next six months but consider buying local to alleviate wait times for overseas products.
Interest rates will hike, but not considerably.
The labor market will normalize as workers spend stimulus checks and savings, realizing they need to get back to work.
The housing shortage will continue.
Multifamily rents set to remain strong – rent will continue to increase, but not to the levels of 2021 – helping these rent rates is an overall 5.5% increase in wage growth; the National Salary of Market Rate Renter is now $70,000, up 12% from $62,000 2021 Q1, YOY.
Lease Loss is real – Operations are seeing more residents stay in their units rather than moving across the street and paying more due to rent increases for new move-ins.
Economists do not see us in a bubble (unless you live in San Francisco).
Do not ignore the negative highlights, but the sky is not falling – not for the next 24 months – continue making hay while the sun shines!
Further sessions dove deeper into the multifamily industry, covering various topics, including the labor shortage, a massive hindrance in this robust economy. Automation was taboo two years ago, but given our crisis, it will be an asset to fill the labor gaps we currently are experiencing. We need to become more efficient by investing in technology and training to keep up. In the multifamily world, residents still want the ‘old-fashioned’ customer service experience of walking into a Leasing Center and speaking with a real person. So, there is a balance we must navigate moving forward.
Potential investors (socially conscious investors) in the multifamily world are starting to look more at the ESG (Environmental, Social, & Governance) of properties to screen investments. Developers need to evaluate these metrics as they develop their properties/communities.