Kimberly Byrum is managing principal for multifamily at Zonda, MFE’s parent company. With nearly three decades of experience in the industry, she is an expert in multifamily consumer research, rent positioning, and product design. MFE caught up with her to discuss what’s ahead for 2023, her take on the single-family build-to-rent market, and her resolution for the new year. You can also hear more from Byrum at the MFE Leadership Summit, March 5 to 7, in Vail, Colorado, and at The Future of Build to Rent event, March 27-28, in her hometown of Dallas.
MFE: As we enter 2023, what bright spots do you see for the multifamily industry?
Byrum: The industry is facing some headwinds that are undeniable for 2023. Throughout my career I have had a front-row seat to watching strong firms and real estate developers, owners, and managers who continue charging forward knowing that there is no perfect market timing. For 2023, I expect those industry mavericks to creatively solve problems and exude positivity with the ultimate goal to provide a quality, diverse rental housing inventory for the next generation of renters. The cream always rises to the top.
MFE: What worries you the most about the upcoming year?
Byrum: I’m watching the asking rental rates on new leases or, as I like to refer to it, the ‘inflation ease.’ While we are cognizant of the need for rent growth to subside to address the overheated Consumer Price Index, our clients’ business is impacted by changes in the interest rate, which is the Fed’s tool to combat inflation. Obviously, lower asking rental rates negatively influence underwriting on new development deals. Our thinking is that rents on new product may adjust back to pre-surge levels or those right around July 2021.
MFE: What market trend has surprised you the most recently?
Byrum: Many of the pandemic ‘popular’ markets are experiencing slowing rent growth at a faster pace than traditional hot spots. Cities like Austin, Texas; Boise, Idaho; Raleigh, North Carolina; and Reno, Nevada, are experiencing declines in asking rental rates at a rate of 4% or more from the peak rents reported in July or September 2022. These markets still have an overall strong cumulative growth starting in July 2021, but they are resetting at a faster pace than other markets.
MFE: What’s the most underrated multifamily market?
Byrum: For 2023, I’m going back to the basics: places like Dallas, Atlanta, Denver, Los Angeles, and Seattle are my favorites.
MFE: How do you see horizontal apartments impacting the multifamily sector?
Byrum: We have found that prospective renters definitely favor the product. As prospects for home buying have dimmed in the latter half of 2022, the horizontal apartment product provides a good alternative for households that would have left the rental market for homeownership. Horizontal apartments are typically developed in far suburban submarkets and provide a ‘lift’ in rental rates that may benefit higher-density multifamily developers who can deliver different product types at a lower price point. The horizontal apartment developers have introduced private yards, which we also see incorporated into suburban garden-style developments.
MFE: Favorite book of 2022?
Byrum: It’s a cookbook! “Barefoot Contessa Foolproof” by Ina Garten.
MFE: New Year’s resolution?
Byrum: Drop the technology!