If You Can Work From Anywhere, What's Stopping You?

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The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

As the COVID-19 pandemic upended the world, it took the commercial real estate market along for the ride.

Businesses were forced to shut down and many companies shifted to a remote workforce, which meant that the multifamily residential market saw changes that could become part of the fabric of the economy.

RealCrowd, an online investment platform that connects investors with multi-family properties across the country, sat down with Yardi Matrix Senior Research Officer Doug Ressler to discuss the multifamily market and the lingering effects it’s experiencing as a result of the pandemic.

Yardi Matrix offers one of the industry’s most comprehensive market intelligence tools for investment professionals. The company provides data and management solutions for multi-family, student housing, industrial, office and self-storage properties. The company analyzes data from more than 130 different markets across the country.

As the COVID-19 pandemic has disrupted all aspects of people’s lives for the past nearly two years — especially the way people work — many businesses are shifting to a hybrid model of permitting their employees to work some days from home even if the office is open.

Remote Work Changes Everything

The ability to work remotely also has enabled people who want a change of scenery to relocate to the location of their choice. Even though they’re able to work from wherever they want, price still dictates where most people choose to live, Ressler said.

“We see people moving from a migration standpoint to where there are opportunities,” Ressler said. “If I can work from home, do I actually have to physically be in the location where my employer is?.”

As people move to markets like Phoenix, Las Vegas, Denver and Dallas, the big variable is land, and investors and developers have to consider how it is zoned and whether there are restrictions as to how it can be used.

“If I want to put up self-storage, put up an apartment building or do single-family rentals, what’s the cost?” Ressler said.

Many large multifamily developers such as Equity Residential EQR, AvalonBay Communities Inc. AVB, and UDR Inc. UDR have continued to develop and invest in residential real estate throughout the pandemic.

Large cities like New York and Newark, New Jersey, don’t have the flexibility that communities in the southwest have. Even so, Ressler said, they are resilient and could present good investment opportunities.

“Certainly, big cities are not going to blow away,” Ressler said. “If you’re looking at an investment from a demand standpoint, where are you going to look? You’re going to look where you have less risk, and obviously big cities present a very good advantage.”

Migration is having a big impact on the rental market as people who relocate to another city or even another part of the country decide to rent for a period of time until they decide where they want to buy. 

That also is contributing to the shortage of affordable housing.

“We can’t provide supply, so what do we do?” Ressler said. “You see everything from manufactured homes to single-family rentals that people are creating.”

Still, the housing market had an affordability issue before the pandemic that hasn’t subsided — particularly in southeast markets where in-migration is driving rents up — especially in the workforce housing segment.

“Southeast markets look good in terms of overall rental rate increase, but a lot of the demand is in the workforce, and that’s not where a lot of the supply coming in is being built,” Ressler said. “You get into an economic disparity in terms of what people want, how much they want to pay and where the demand is based off the supply.”

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.