The huge demand for multifamily housing in the Southeastern United Sates has made developers think outside the box, leading to big returns on their investment.
The pandemic has accelerated the need for a rapid supply of housing stock,” says Doug Ressler, manager of business intelligence for Yardi Matrix.
Florida, Georgia, North and South Carolina are on pace to create more apartments and multifamily housing by adaptively reusing more old hotels, retail and office building than in the last 10 years.
“We will likely see a fair amount of this—redevelopment and converting properties to apartments—over the next few years,” says John Sebree, senior vice president and national director of multifamily for Marcus & Millichap in an article in Wealth Management.
“That is the result of being in a housing crisis, and without new product being built at the same pace as demand.”
Redevelopment of older buildings is attractive to tenants, yielding higher rents. While investors are reaping the benefits. Since the pandemic, the demand for retail and office space is down, while that for apartments are up.
“One estimate could be that renovations could cost about 30 to 40 percent less than new construction for the same number of units,” says Emil E. Malizia, a research professor in the Department of City and Regional Planning at the University of North Carolina at Chapel Hill. “Total development cost per unit should be less as long as the cost of the site and building is not significantly more expensive than the cost of site acquisition for new construction.”
“The trend toward office conversions is a significant departure from the last decade when hotel conversions were popular,” says Ressler. Old hotels were relatively easy to turn into apartment buildings, because the existing floorplans and utilities were already a good fit with residential use. “However, consistent urban demand and increased preference for open-plan layouts and out-of-the-box designs revealed the housing potential in non-residential buildings.”
Creating new apartments by converting and updating older buildings, has proven to be a lucrative investment for developers.
To make multifamily housing a true home it takes an experienced construction group
SWET Construction Group is an industry leader in the construction and renovation of multi-family housing, apartments, condominiums and commercial building throughout the Southeastern United States, offering cost-effective plans, fast and attractive flooring, interior design services, drywall, metal framing, paint and waterproofing.