It was inevitable. One of the under-the-radar beneficiaries of 2010’s apartment industry recovery just had to be multifamily renovators. After the credit collapse shut down their operations in 2008, this group lingered idly through 2009. After all, rents were stagnant, and renovators simply could not financially justify upgrading units while receiving little to no rent roll increases.
Though certainly nowhere near their past volume, renovators in 2010 started to address areas of their respective portfolios that either needed an upgrade or could be positioned to claim more rents after a rehab. The country’s Top 25 Renovators collectively started work on redeveloping 39,287 units of multifamily housing in 2009, with those numbers expected to rise this year. “Rents perked up starting in the second and third quarters of last year,” says Jorge Koziolkowsky, an executive vice president for Denver-based Simpson Housing, which didn’t renovate any units last year but plans to do approximately 331 units this year. “We have four properties that we’ve identified [though have not yet committed to] for rehabbing. But we think those markets are ready to bounce in rents.”
The bottom line is that renovators are gearing up to go again, whether it’s just dipping a slight toe in the water, like Simpson; doing full-bore makeovers while the property is stripped to its bones, like Denver-based REIT UDR; or, like Memphis-based REIT MAA, renovating 1,760 units, which it did last year. And with this next era of rehabs, companies are finding out which products, designs, and individual renovations will have traction with the next generation of renters.