The pandemic is having a lasting impact on commercial development across all sectors: office, retail, and residential. Remote work is driving population growth to less expensive rural markets, where employees work from makeshift offices in their homes. Meanwhile, e-commerce is redefining the retail arena. In a Census Bureau report, e-commerce sales increased by 43% to $815.4 billion during the first year of the pandemic, making e-commerce now a $1.02 trillion industry.
These shifts drive the growth and need for multi-family residential development.
Developers need to abandon the cookie-cutter residential community model and embrace creating environments that foster a better quality of life — inside individual units and the residential community. Alcoves and dens are popular in-unit additions. But more than minor interior adjustments, multifamily residential design needs to accommodate new work habits. Schulman Properties has been doing this for decades — creating luxury in design and effortless camaraderie within their developments. Luxury living is the hallmark of modern design, but residents are coming to expect more.
Here are three expert tips for building a successful and profitable multifamily residential development enterprise:
1. Focus on resident-centric building.
A residents-first approach to building is about enhancing the livability factor. “Real estate is about creating a better place for people, a better life for people,” Schulman Properties founder, Bob Schulman, emphasizes. There has been a pivotal change in the location of social interactions. Where the majority used to take place within an office environment, remote work has created a social shift toward communities.
New developers need to be acutely aware of how to bring people together within their communities to improve liveability.
Well-being is the epicenter of just about every aspect of our lives — whether that is at work or home. According to a Forbes survey, improved mental health topped the list of resolutions in 2023 for almost every age group from 18 to 57. A resident-centric approach is fundamental in the development process and a major shift in thinking from traditional residential communities. Schulman Properties has led the way in designing resort-like communities to call home with amenities like on-site restaurants, fitness classes, health coaches, and coworking spaces. Its latest development includes a podcast or YouTube sound booth.
2. Form strategic partnerships.
Recently, Schulman Properties partnered with the North American Development Group (NADG), which gives the company the leverage needed to transform community development. NADG is a leading property investment and management group. Schulman believes that when it comes to multifamily development, a smart strategy includes equal parts equity, loans, and expertise. This recent partnership taps into the equity and lending power of NADG and expertise in community residential development of Schulman Properties.
To be successful in multifamily development, companies need to build alliances that bring together building acuity, equity or borrowing power, and resort management.
Strategic partnerships allow two or more entities to tap into the expertise of each other. They provide a layering effect where each entity helps the other grow and maximize its profits. Creating partnerships is one of the best vehicles to scale. Schulman Properties has several such partnerships, which have allowed the company to continue to develop self-sustaining enclaves for its residents. Axum Hospitality is one of those partnerships. Axum redefines luxury living by securing resort-level amenities, including fitness, recreation, wellness, dining, and performing arts. In addition to resort-like amenities, Axum provides basic services for the convenience of its residents. Such services include car washing and veterinary services.
3. Leverage funding resources.
Schulman emphasizes creating joint venture partnerships to eliminate traditional lending by leveraging “in-house” financing. This enables developers to move more quickly in the marketplace to create what nobody else can: A one-of-a-kind residential community.
Commercial development relies heavily on capital. It’s a major component of growth in the real estate development business. But rising interest rates impact the value of money. Higher rates mean lower borrowing capacity. Loan-to-value ratios of 50% to 65% and shorter terms make getting a loan tricky and, sometimes, impossible.
When Schulman began developing multifamily communities, no one was creating residential developments that mimicked resort hotels. He found a way to create this by monetizing amenities with a focus on designing residential experiences, not just luxury housing. Innovation drives his business and is echoed throughout his newest residential community: Ilumina.
He advises that one of the best things new developers can do is learn everything there is to know about residential development and axillary businesses. Keep an open mind and find ways to stand out in the market.
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