Multifamily Trends, Pipelines And Overlooked Markets: What Should Investors Be Watching?

While at one point it may have seemed there would never be enough multifamily units to meet the demand, market dynamics appear to be shifting. 

A surge in multifamily construction across the U.S. has increased supply by almost 15% since 2020. As a result, half of major U.S. markets have seen effective rents decline in the past year. 

This doesn’t mean it’s all bad news for multifamily developers, however. While Class-B and C markets experienced negative absorption, occupancy in Class-A assets is on the rise. This is true in Baltimore, where Class-A rents have increased and demand is expected to rise as more businesses return to the city’s central business district. 

What does Baltimore’s multifamily development pipeline look like? Will supply outpace demand? What are the hottest amenities drawing in tenants? These questions and more will be discussed at Bisnow’s Baltimore Multifamily and Mixed-Use Summit at the Lord Baltimore Hotel on April 23. Register here for the event. 

Daniel Rigaux, vice president and head of multifamily at MCB Real Estate, which is headquartered in Baltimore and has a portfolio across the U.S., has seen the shifting trends in multifamily over the years firsthand. 

“I remember when having a movie theater in your building was the big draw, and the tour included going from one sterile, unused amenity space to another,” he said. “Today, the amenities everyone wants are centered on two values embraced by our culture: frictionless transactions and the blending of work-play-wellness.”

Frictionless transactions start with dynamic websites and continue with online leasing options and tech that allows residents access to building spaces. The design should also blend residential space with retail to foster connectivity, he said. 

Rigaux will be at Bisnow’s April 23 event, speaking on a panel about multifamily and mixed-use development and investment. Bisnow spoke with him to learn more about the multifamily trends he is seeing, what is in the development pipeline and MCB’s plans for the future. 

Along with gyms, clubs and coworking spaces, Rigaux said the main trend drawing residents to multifamily buildings is tech. Residents want the ability to sign their lease, pay their rent, schedule maintenance calls and enter the building all from an application on their phone and a fob on their keychain. The focus on technological convenience is especially critical in MCB's upcoming purpose-built student housing development — 473 beds for Morgan State University.  

“Security is always on everyone’s mind, and tech helps to create a secure and simple control access,” he said. “Additionally, the tech notifies you when you have a package and helps to foster community with notices of events.” 

He also said that while large coworking spaces are a major draw, smaller breakout rooms where people can have private conversations are also important. 

“With so many people working remotely, having the option to get out of their apartment and go into the common area is very attractive,” Rigaux said. “But if you need to have a video call, you can't do that in an open area. So having these breakout rooms, podcast rooms, Zoom rooms — whatever you want to call them — is very well received and appreciated and, more importantly, used.” 

Rigaux said demand for affordable housing drives a lot of the development pipeline. Most projects take two to five years from concept to delivery, he said, so some areas like Nashville, Austin and Charlotte that have many projects in development simultaneously may be on the verge of oversaturation. 

But this is not the problem in Baltimore. 

“Baltimore has a very strong pipeline, but it is nowhere near at the saturation level as some other markets,” he said. “Construction is ebbing right now, and we may see a dip in a few years. According to CoStar, Baltimore has just over 3,000 units under construction, and the market absorbed 2,300 units in the last 12 months. In general, I'd say that pipeline is very healthy.” 

For investors looking to break into the multifamily market, Rigaux said they should focus on underserved areas that have strong demographic and economic indicators. He cited Yard 56, an MCB mixed-used development in Baltimore’s Greektown neighborhood. 

The site where the project was built was a desolate brownfield, but there was lots of development in adjacent neighborhoods, and it is across the street from Johns Hopkins Bayview Medical Campus. Now it is home to a development with multiple retail and dining options, a grocery store, a fitness center, a medical office building and 227 apartments. It also features 24/7 package rooms and coworking common areas with flexible furniture. As a result, the development was 68% leased within eight months. 

“If you looked at the site five years ago you never would have thought a project like this could exist on it, but we saw the strong economic and demographic drivers, and we went ahead and persevered,” Rigaux said. “If you’re able to uncover the potential of these underserved areas, you can drive meaningful development with attractive returns.” 

At its core, Baltimore has many of these key fundamentals that make it a great investment, Rigaux said, including renowned education and medical institutions and strong transportation linkages. The economic vitality stemming from Baltimore's port was underscored by the events surrounding the Francis Scott Key Bridge collapse, highlighting its pivotal role as an economic engine.

“When you spend time in Baltimore you see there are so many incredibly great neighborhoods: Canton, Fells Point, Federal Hill, Hamden and now Greektown, to name a few,” he said. “They're interesting and authentic, which is lacking in so many markets. Combine that with the major education and medical drivers and the renaissance that the city is beginning to embrace, and you have a fantastic investment opportunity.”   

Along with multifamily, Rigaux said MCB also has science and health, retail, industrial and office assets in its portfolio. Looking ahead, he said one of the firm’s strategies will be to look at the past.

“A strategy that has consistently yielded results is looking at older real estate and envisioning its potential to be redesigned and reimagined,” he said. 

MCB is taking a 250K SF building from the 1980s on the Golden Mile in Frederick, Maryland, and transforming it into 203 apartments and 42 townhomes with a renovated retail center. 

“This is going to attract a strong residential base and mixed-use offering to the community,” Rigaux said. 

Despite economic fluctuations, MCB hasn't had to pause the developments it has in the works. MCB’s development pipeline encompasses more than 1M SF of commercial office, warehouse/industrial and retail projects, as well as more than 830 multifamily units. 

Rigaux said he believes things will soon start stabilizing, and CRE will be able to make better plans for the future. 

“As that future starts crystallizing, there should be additional movement in the markets and more developments moving forward,” he said. 

This article was produced in collaboration between MCB Real Estate and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.