As the pandemic progresses, the great exodus of renters from downtown apartments to the suburbs is transforming into more of a shift across the center of America’s cities.
In some urban areas, residents who lived downtown before the pandemic are now opting to remain downtown, but they’re moving to a roomier place on a cheaper block rather than leaving the city altogether for the greater savings and seclusion of the suburbs, multifamily professionals say. In doing so, renters can stay near workplaces as employers start calling staff back to the office.
“We’ve seen, clearly, an urban shuffle (and) not as much an urban exodus,” said Melanie Trapnell, senior vice president of operations at Gables Residential, during a panel discussion at the National Apartment Association’s annual Apartmentalize conference in Chicago.
Trapnell added that those renters, faced with the choice of moving out to the quieter suburbs with a longer commute, have now become “open to submarkets within that urban core that they wouldn’t have otherwise looked at.”
Atlanta-based Gables Residential has a national perspective on shifting apartment demand: The multifamily development and investment firm’s executives oversee 38,000 rental units and 400,000 square feet of retail space, mostly in the Sun Belt, as well as in Washington, D.C., and Southern California. The firm is providing some of the national insights at this week’s conference as apartment owners navigate an economic recovery buffeted by the effects of the coronavirus delta variant.
In recent months, the national apartment market’s suburban and urban areas have been building up steam. In July, across 44 of the 50 largest U.S. cities, multifamily rents reached record highs, with three cities recording year-over-year rent growth steeper than 20%, according to CoStar data.
Now rents are up equally in suburban and downtown areas, the figures show, a notable turnaround for downtown properties that were more acutely challenged by the pandemic early on last year.
“People are looking to stay in areas where they enjoy the quality of life,” Trapnell said. “They’re shuffling around in a market, but not necessarily going in a completely different direction.”
Longer Downtown Moves
In Phoenix, that desire to keep a downtown lifestyle but find a cheaper, roomier apartment is now involving renters who are moving from other parts of the country rather than just across the city’s urban core. Phoenix, which is one of the country’s strongest multifamily markets, is drawing new renters downtown looking for bigger apartments than what they have, but real estate executives say those renters are coming from larger, pricier markets like California, Chicago or New York.
Among those renters, downtown Phoenix has been a popular settling spot, Brad Miner, senior director of capital markets in the region with real estate services firm JLL, told CoStar News in an interview.
“We’re more of a suburban market, so we noticed (renters) from out of state coming to the urban core,” with some perhaps picking apartments that offer the benefits of a lower cost of living, Miner said. He added that those renters probably flocked to downtown Phoenix because it may have most resembled the cities they were accustomed to.
“During COVID, we saw robust leasing in the suburbs … but the higher-density stuff was the beneficiary of relocations from out of state,” Miner said.
Apartment dwellers are shuffling around downtowns for the same reason the initial wave of moves involved a migration to the suburbs. Factors like outdoor space, roomier apartments and privacy became more important during the coronavirus lockdowns last year and have remained top priorities among many renters.
And for white-collar workers who kept a job during the pandemic and live in temperate cities, that newfound prioritization of outdoor access and affordability makes sense in some parts of downtowns as offices start to reopen and employers call staff back into the workplace.
As Mike Clow, executive director of real estate operations at developer and property manager Greystar, put it during the Apartmentalize panel: “What COVID did is it brought people back into more focus of what’s more important.”
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