Design Around the country, apartment developers and investment companies are looking to invest in major renovations of their properties. “There’s a definite trend to perform major work rather than cosmetic remodelings,” says Jonathan L. Kempner, president of the National Multi-Housing Council. “These have become a very fertile area for activity and profits.”
The key reasons stem from the combination of tightening vacancy rate and rising rents, creating more demand and less supply, plus more income to fund the renovations. “Developers are finding there is a large market if they take ‘C’ type properties and upgrade them to ‘B’ or ‘B+’ properties,” he says. In addition, pension-fund managers are looking at a wider range of options in which to invest, extending their options to ‘B+’ properties. This offers more incentive to raise units to this classification.
Key markets are those with older downtown areas bordering on a rebound, where upgrades will attract an influx of affluent tenants. Already tight rental markets, such as New York City; Atlanta; Washington, D.C.; and San Francisco are prime targets. Remodelers can tap into this resurgence by marketing their expertise to local developers who are looking for professionals who can handle the jobs.