Our predictions for the year began with technological progress, tenant preferences, and market dynamics.
Revisiting these forecasts provides valuable knowledge of renters' shifting preferences and the strategies developers and investors adopted to meet these demands.
However, in addition to revisiting them, it’s also important to look forward to what we might expect in 2025 and beyond.
Looking Back at 2024 Multifamily Development Trends
We’ll begin by discussing how 2024 trends unfolded, stressing the sector’s adaptability and laying the groundwork for evaluating future opportunities.
Technology
Predictions of tenants’ growing dependence on smart home features for technology-driven amenities in multifamily housing proved accurate.
Demand for app-controlled systems, keyless entry, and automated maintenance requests has surged. Today, many renters consider these features as standard offerings.
In fact, according to one study by Rent.com, 82% of renters want at least one type of smart home technology in their home.
Sustainability
Predictions for 2024 spotlight an increasing emphasis on sustainability, a trend renters have strongly validated. A recent study showed that 73% of Gen Z tenants are willing to pay a premium for sustainable features in rental properties.
However, only 12% of landlords are prioritizing these upgrades, indicating a gap between tenant expectations and property offerings.
This gap is evidence of a meaningful opportunity for developers and landlords to align their strategies with renters’ eco-conscious preferences. Ideally, in doing so, driving higher demand and tenant satisfaction.
Multifamily Housing Maintained Stability in Uncertain Markets
The multifamily sector’s reputation as a low-risk investment remained strong throughout 2024.
Housing shortages and high mortgage rates contributed to steady demand for multifamily rental properties, even as other asset classes encountered difficulties.
Single-family home sales declined, boosting reliance on multifamily developments as an accessible housing alternative.
In fact, according to Reuters, in October 2024, sales of new U.S. single-family homes dropped to the lowest level in nearly two years.
Cities like Charleston and Greenville saw consistent rental demand, supported by population growth and job creation. Multifamily properties in these areas achieved high occupancy rates, reaffirming their role as a dependable investment choice.
For example, in Q2 of 2024, Charleston’s multifamily occupancy rate was a healthy 93.5%.
Community Amenities Became Top Priorities
At the start of the year, we also anticipated that community amenities would likely be considered a top amenity for renters, and this proved true.
In a 2024 study of renters’ top priorities, “shared community spaces” came in second place. Renters 35 and older voted these community amenities as the second most important factor when considering renewing or signing up for a new lease.
Unique Opportunities in South Carolina
South Carolina’s multifamily development sector is an outlier in a few ways.
The state’s low proportion of multifamily housing stock relative to other regions creates considerable opportunities for developers and investors.
Rapid population growth in cities like Charleston fuels demand for rental units, while limited supply allows for competitive rental pricing.
Investors entering the South Carolina market benefit from untapped potential as zoning regulations began to loosen in response to housing shortages. It’s worth noting, however, that South Carolina isn’t the only state in the country that offers lucrative opportunities for multifamily development.
Preparing for Multifamily Development Growth in 2025 and Beyond
According to a 2022 report from the National Apartment Association and National Multifamily Housing Council, the U.S. needs 4.3 million new apartment units by 2035 to mitigate apartment demand and affordability issues.
As such, the multifamily development sector will likely remain a focal point for developers and investors in 2025 and beyond.
Challenges in Multifamily Development
Even with strong demand and promising trends, the multifamily development sector faces hurdles that require strategic solutions.
These challenges stem from regulatory, economic, and demographic shifts that developers and investors must address to capitalize on opportunities in 2025 and beyond.
Affordability vs. Profitability
Balancing affordability for tenants with profitability for developers persists as a considerable concern.
Rising construction costs, driven by supply chain disruptions and increased labor expenses, make it difficult for developers to deliver affordable units without sacrificing margins.
For instance, the National Association of Home Builders reported in mid-2024 that material costs had risen substantially year-over-year, further constraining budgets.
Regulatory Barriers
Zoning laws and lengthy approval processes continue to impede the pace of multifamily development. In many cities, outdated regulations limit the ability to build higher-density housing, exacerbating the housing shortage.
While some states, like South Carolina, began easing zoning restrictions in 2024, other regions lag, leaving noteworthy opportunities untapped.
Economic Uncertainty
The broader economic picture also poses potential challenges to multifamily development.
In 2024, rising interest rates increased financing costs for new multifamily construction. For many developers, higher financing costs impair project viability, especially in locations with low returns or intense competition.
Inflationary pressures might also reduce renters’ ability to afford rising rental prices, even in high-demand markets. This may lead to a mismatch between developers' pricing plans and tenants' financial reality.
2025 Multifamily Development Predictions
Despite these challenges, the outlook for multifamily development remains promising. Developers and investors who prioritize innovation and align with market demands are well-positioned to succeed.
A few strategies worth considering:
Embracing sustainability: Upgrading buildings with energy-efficient systems, solar panels, and green building certifications can help attract environmentally conscious tenants while lowering long-term running costs.
Focusing on underserved markets: States like South Carolina, which have a limited multifamily housing supply but expanding populations, provide major development prospects. Developers can capitalize on these markets by picking regions with favorable zoning revisions and infrastructural investments.
Utilizing technology: Integrating smart home technologies and app-based services will continue to be sought after. Utilizing these tools to streamline operations and enhance the tenant experience will provide a competitive advantage.
Building resilience: To navigate economic instability, developers can consider innovative financing alternatives (like public-private partnerships or tax incentives) to stabilize project viability.
The multifamily real estate sector has consistently demonstrated resilience and adaptability, and 2025 is shaping up to be another year of opportunity for those prepared to innovate and respond to emerging trends.
While challenges remain, a strategic approach rooted in tenant needs, sustainability, and forward-thinking investments will ensure continued growth and success.
Work With Streams Development
If you’re eager to discuss your multifamily land, contact Streams Development today.
As one of the Carolinas's largest and most experienced development firms, we have completed over one hundred projects topping $1 billion in investment. You can also learn more about our property development projects here.
Interested in learning more about opportunities in multifamily development?
Visit one of these articles next: