Multifamily Investor Expo - February 22
Multifamily investing recently has taken on some powerful new players, including WeWork co-founder Adam Neumann. Neumann has acquired majority stakes in more than 4,000 apartments valued at over $1 billion in many U.S. cities, according to The Wall Street Journal’s analysis of public records. His goal? To create a widely recognizable apartment brand that appeals to young professionals and stands out from the competition.
After resigning as chief executive from WeWork, a flexible shared workspace provider, Neumann now has eyes on the apartment business, an already popular investment trend. According to D.J. Mauch, a partner in Mr. Neumann’s family office, “Since the spring of 2020, we have been excited about multifamily apartment living in vibrant cities where a new generation of young people increasingly are choosing to live, the kind of cities that are redefining the future of living. We’re excited to play a role in that future.”
To kick off his multifamily enterprise, Neumann acquired a major stake in Alfred Club Inc., in 2020. Alfred Club, an American startup, is an end-to-end resident experience and building management platform that operates in more than 100,000 apartments.
Neumann also invested in the Caoba apartment tower in downtown Miami, a property valued at roughly $200 million. Caoba is a 27-acre, 444-unit building with a high level of amenities. Adding to Neumann’s portfolio, records indicate that Miami Worldcenter’s developers obtained permits to begin building a second tower at Caoba.
What’s the allure? For one, the multifamily housing market fared very well amidst the Covid 19 pandemic, with record-setting investment volume. In CBRE’s Midyear Real Estate Outlook, this trend is attributed to a “large young population, a lack of affordable housing, and sufficient capital to continue building.”
Secondly, rents are booming due to migration patterns. For instance, Nashville and Miami have seen tremendous market growth in multifamily housing due to warmer weather, less-costly housing, and lower taxes.
Not surprisingly, Neumann has also taken an interest in suburban apartments. Urban-suburban transitions during the pandemic spurred a strong demand for apartments and other rental properties. Neumann currently holds stakes in suburban buildings in Decatur, Georgia and in Norwalk, Connecticut.
According to CBRE’s recent reports, Q3 2021 showed continued momentum in the multifamily sector. Volume increased by 31% quarter-over-quarter in Q3, to $78.7 billion.
With investment volume totaling nearly $179 billion year-to-date, the market is on track to well exceed 2019’s record total of $193 billion. These numbers reflect the demand in the burgeoning multifamily investment industry.
So how will WeWork’s co-founder Adam Neumann fare? It’s too early to say, but what’s certain is that he has carved out a niche in what may portend to be the first of many industry shake-ups to come.