The Evolution and Future of Apartment Community Short-Term Rentals

The lines between hospitality and traditional apartment communities continue to blur, with the modern renter expecting flexibility. The way we work has forever changed and we will not go back to our pre-COVID lives once we reach herd immunity. As an apartment operator, we’re responding to demand shifts by offering residents the optionality to lease units on a short-term basis and move out with limited notice. Today, this optionality is provided by 3rd party short-term rental operators who partner with landlords and handle all the logistics of sourcing and managing residents who plan to...

Is there such a thing as a Multifamily ‘Brand’?

Multifamily real estate is evolving to become more of a consumer product. By that, I mean that real estate is becoming more flexible, branded, and focused on the consumer. At the same time, ownership of apartments is rapidly shifting from individuals to regional and national firms. As the industry becomes more institutional, we are seeing firms roll up their communities under brands. I use that term ‘brand’ loosely. A brand, to use Seth Godin’s definition, ‘is a set of expectations, memories, stories, and relationships that taken together, account for a consumer’s decision to choose one...

The Best Amenity is Affordability

There is a lot of conversation within the multifamily real estate development community about the size and layout of unit types. For years, the average size of apartments was trending downward as developers favored density to achieve higher rents per square foot to make deals pencil. In a post-pandemic world where we anticipate more ‘work from anywhere’ including the home, the chatter is around increasing unit sizes. In my view, it’s not that straightforward. What I look at is affordability, functionality, and designing with a specific end user in mind. Here are a few of the topics I’m...

Rethinking Class B Multifamily Supply Risk

At Atlas, we focus primarily on value-add workforce housing. One of the most attractive aspects of the asset class is that it’s difficult to add new supply. Capped supply + growing demand = outsized income growth and price appreciation! But just how capped is supply of value-oriented multifamily? In a previous post I wrote about the constraints to building middle-income housing, however, I’m beginning to reassess those constraints. When the incentives to build are strong enough, creativity and ingenuity kicks in. Here are 3 main drivers that could lead to increased supply of workforce...

The Future of Single-Family Rentals

There are few real estate sectors hotter than the single-family home rental business (SFHR). What started as a distressed opportunity following the Global Financial Crisis, is quickly becoming an institutional asset class. The combination of demographics (aging Millennials) and accelerating trends such as remote work has led to strong demand and rent growth. From the operational side, advancements in technology have enabled owners to more efficiently manage a disbursed portfolio of single-family rental homes. I’m bullish on the sector and believe single-family rentals are well-positioned...

Living-as-a-Service

Multifamily real estate is shifting from an asset class to a business. What was once viewed as a ‘passive’ investment is becoming a sophisticated operation.   Accelerated by the Coronavirus pandemic, the preferences of today’s renters have changed. The one-sized-fits-all model of the past is dead. Knowledge workers expect flexibility. They’re not tethered to a single geographic location. They expect to access everything seamlessly through technology. And they expect great customer service. The game has changed, creating opportunities for nimble real estate firms and new entrants into...

Building more Middle-Income and Workforce Housing

At Atlas, we focus primarily on acquiring value-add workforce housing. A big part of our investment thesis is that you can’t build new middle-income housing, so supply is capped while the demand for high-quality middle-income housing keeps growing.  This is just a fact accepted by most real estate operators and as a result, capital has poured into workforce housing, cap rates have compressed, and returns are squeezed.  Few understand the dynamics at play which make it nearly impossible to build much-needed middle-income housing today. To better understand why we aren’t building...

Lifestyle Brands Physical Real Estate Strategy Extends Beyond Retail

The way lifestyle brands approach their physical real estate strategy is changing. As sales have shifted online, brands have begun to utilize their physical presence to deepen their relationship with the consumer, share their story, showcase their products, and ultimately fuel (online) sales. This strategy is not just being deployed across conventional retail space, we’re beginning to see consumer brands in multifamily, hospitality (hotels/restaurants), and the condo business as well. Multifamily, until recently, was a relatively commoditized product that competed on price and location....

Apartments, Hotels, What’s the Difference!?

The way people are living, and traveling has fundamentally changed and the lines between apartments and hotels have blurred. Guests and renters are no longer constrained by a market flooded with watered-down options and brands dictating the experience.  Today, renters and travelers have nearly endless options, catering to any experience they seek.    I recently traveled to Nashville and I decided to test out Niido, an apartment community ‘powered by Airbnb’. It’s a traditional midrise apartment community that allows (encourages, actually) its residents to rent out their apartments...

Bringing a Hospitality Mindset to Multifamily Development

We’re in the midst of a multifamily development boom. If you’ve been to any major city over the past few years, you see ‘stumpy’ midrise developments everywhere. The forgettable stick-frame buildings all look similar. They are relatively cheap to construct, go up quickly, and cater to a wave of demand from Millennials and Gen Z’ers delaying marriage, having kids, and buying or renting a home in the suburb. With the cost of construction and land at elevated levels, development yields are compressed, developers have little flexibility to physically differentiate their property from the...

The Multifamily ‘Amenities Arms Race’ Shows no Signs of Slowing

Multifamily development has picked up considerably over the past few years, as the demand for high-quality apartment communities near major employment centers and entertainment has increased. Driven by demographics, couples getting married and having kids later, lifestyle choices, and pent-up demand, millennials, Gen Z, and some Baby Boomers are flocking to newly-developed class A communities. These individuals seek a lifestyle and expect way more than a nice place to live; they desire conveniences, technology, a robust resident event program and sense of community, and amenities. Lots of...

Do We Need to Change the Way we Think About Homeownership?

My answer to the question posed in the title is ‘I have no idea’. However, I’m a firm believer that homeownership is not the best path for everyone and that the role of homeownership in the U.S. has been skewed in a way that is dangerous. The term ‘American Dream’ comes from James Truslow Adams ‘Epic of America’ who wrote in 1931, “life should be better and richer and fuller for everyone, with the opportunity for each according to ability or achievement regardless of social class or circumstances of birth.” The original term didn’t have anything to do with real estate but has evolved over...

Heaps of Fun Exploring the Land Down Under

G’day. How ya goin’? I spent the past two weeks exploring Australia. It’s an incredible place filled with modern cities, unique animals, beautiful landscape, great coffee, and welcoming people. As I like to do, I wanted to share some of my observations (I did something similar with recent trips to Japan and Costa Rica).   For the past 14 days, I was largely disconnected from work, sports, and U.S. news. The time change (Australia is 15-16 hours ahead of the east coast) almost forced me to disconnect from the day-to-day news. I found it quite liberating and was a good reminder of how toxic...

Who Says Workforce Housing Can’t be Sexy

Historically, class B/C garden-style apartment communities have been typified by dated 70’s/80’s architecture, uninspiring interior design, lackluster landscaping, and boring commodity amenities. Recently, the divide between class A and class B/C apartment communities has been exacerbated by the amenity arms race, with each new development looking to outdo its competitors. It’s common for new communities to include golf simulators, meditation rooms, indoor self-cleaning dog parks, rooftop pool/lounges, and generally over-the-top design and features, while class B communities still have...

Aspects of the Real Estate Acquisition Process I find Frustrating

Over the past several weeks, I’ve been deep in a new value-add multifamily transaction. Acquiring real estate is cumbersome, complex, and opaque, yet we continue to complacently accept this reality. Part of the issue is that acquiring real estate is very fragmented, with different players collecting disparate data, requiring 3rd parties, and all profiting from different elements of the process.  This complexity is exactly where opportunity lies. Based on my recent experience, here are a few of the aspects of the acquisition process I find most frustrating. Deal Sourcing The deal sourcing...

How to Make Apartment Features and Amenities Sounds Sexy

We recently embarked on a project aimed at improving the online marketing process for all our multifamily properties. The intent was to greatly improve our web presence, access deeper analytics, build a multifamily brand, and control the process from the ownership-level. Since we utilize 3rd party property management, each asset utilized a different website template, property management software, paid search marketing strategy, lead tracking process etc. From the ownership side, we had little transparency into the effectiveness of each marketing channel and were unable to make data-driven...

Alturas Capital: Born to be a Real Estate Entrepreneur

‘Real estate is an entrepreneurial business’ is a phrase I throw around a lot on this site. It’s true, but what does it even mean? It’s a combination of two things; first, many real estate professionals get into the business to ultimately become entrepreneurs. Secondly, success in real estate, whether on your own or within a larger organization, requires entrepreneurial thinking. Blake Hansen, Managing Partner at Alturas Capital, is the quintessential ‘entrepreneur’ who stumbled upon investing at a young age. He started out at age 11 investing in stocks, growing...

It’s Better in the Crest

Growing up, I spent every summer on the Jersey Shore. My parents have a house on Sunset Lake in Wildwood Crest, the last exit off the Parkway before hitting Cape May. I’d spend my weekends between baseball and soccer games, ‘down the shore’, fishing, boating, doing water sports, biking the boardwalk, hanging on the beach, and going out for ice cream. Each evening we’d gather for a family dinner and witness the most beautiful sunset, watching as the colors of the sky changed from a bright yellow/orange to deep reds and purples. As a kid there was nowhere else on...

A Day in the Life at a Boutique Real Estate Development Firm

Over 2 years ago I published a post outlining a typical day for me at Atlas. Re-reading the post, it's amazing how little has changed. Yeah we're doing larger deals and my daily responsibilities have broadened, but every day is still filled with calls, meetings, and a million little projects. I enjoy the fact that each day is different and I have the flexibility to run with my own projects. It provides the opportunity to make a significant impact on the success of the firm and be involved in all aspects of a transaction. I love it! The small firm environment is...

ASotREG Interview: Dr. Peter Linneman on Real Estate Careers

Last week I had the honor of interviewing Dr. Peter Linneman for the blog. For the few who may not be familiar with Dr. Linneman, he is one of the top minds in the real estate business. He has a unique perspective grounded in both the academic and professional world. He’s the Chairmen of the Wharton Real Estate Program, on the board of a number of public real estate companies, and founder of Linneman Associates, a premier real estate consulting and research firm. I reference Peter’s work a lot on the blog; his textbook Real Estate Finance & Investments is one...