Multifamily
In the past, multifamily properties (think apartment buildings) were more often grouped with other residential assets like single-family homes than rolled in with commercial real estate. However, multifamily assets now account for the second-largest share of institutional investors’ holdings behind the office sector, making up roughly 20% of the U.S. commercial real estate stock.
Population growth—especially among demographics more likely to be renters—has a big effect on demand for multifamily. With the number of renters in the U.S. increasing, the range in apartment property offerings has expanded to fit their varied needs and tastes. Size, density, location, and amenities break up the multifamily asset class.
In terms of size, multifamily buildings are often classified as follows:
- Low-rise or garden-style: 2-4 stories high
- Mid-rise: 5-9 stories
- High-rise: 10 stories or higher
Multifamily also covers a number of niche asset classes for specialty markets. Student housing is a multifamily property built close to an anchor college or university designed to attract the students there who don’t live in the dorms. They often have amenities like pools, game rooms, fitness centers, and even on-site restaurants and retail designed to ease the transition to life off-campus.
Another newer property type within multifamily is Build-to-Rent (BTR). Build-to-Rent takes the best aspects of single-family rentals and upgrades the experience by developing all homes inside a professionally managed community. They’re similar to traditional, gated residential neighborhoods with great community amenities—swimming pools, tennis courts, dog parks—and professional management without burdening residents with HOA costs or a mortgage.
