Photo: The Halstead in Houston, Texas, Courtesy of Cortland Partners
The rehab industry is big business, and thanks to a recent report, we know just how big.
Over the last five years, multifamily owners spent about $51.9 billion in rental repairs and improvements, averaging $1,410 per unit, or $1,740 per-unit less than single-family owners, according to the Harvard University Joint Center for Housing Studies’ (JCHS) most recent report on rental investments at the metro level.
Some key findings of the report include:
- About 59 percent of the money spent on rehabs are budgeted for exterior, systems, and flooring/carpeting replacements.
- Multifamily owners spent an annual $1.37 per square foot on rehabs and repairs from 2010 to 2011.
- The metro that spent the least per unit on capital expenditures for large garden style properties was Sacramento, with just $430 per unit.
- Meanwhile, Miami ranked the highest among metros, spending $1,480 per unit.
- Older buildings are typically more costly to renovate, as the average cost of per-unit maintenance and capital improvements in buildings built before 1960 was $1,700, versus $830 in buildings built after 1999.
- Smaller properties tend to be more expensive as well since they can't take advantage of economies of scale. Those with two to four units spent the most per unit annually, averaging $1,690 for repairs and capital expenditures.
- Surprisingly, kitchen and bathroom improvements make up only 10 percent of rental improvement spending.
- 2005 saw the largest average annual spending on rental improvements for large garden properties from 2001 to 2012, at $2,140.
**Source for all data: Rental Investments at the Metro Level, Harvard University Joint Center for Housing Studies. NOTE: All info is preliminary and part of an ongoing research effort by the JCHS, so numbers are subject to change when the final report is released. -Linsey Isaacs is an assistant editor with Multifamily Executive magazine. Follow her on twitter @LinseyI to continue this conversation.
