New technology and its rapid application in our lives are quickly changing our lifestyles.
Many of these new developments and trends have the potential to substantially impact many different asset classes — all to the advantage of multifamily investors.
There has been a lot of demand for self-storage over the past 20 years. Even a lot of building of new storage sites. Though if you’ve moved recently, and had to use one, you know how painful it is. Now with autonomous trucks and loading robots like those being used at Walmart, you can soon have your belongings packed into a truck for you, held at a remote storage location where land is cheaper, and have boxes or pallets delivered to you at your new address as needed. Expect prices of storage units to decrease with this, meaning prime locations occupied by self-storage units now will be far less profitable and will have to find higher and better uses.
2. Gas Stations
With the exception of big gas and big auto’s lobbying power to delay it, we’ll soon only need electric vehicle charging stations. They won’t need to be manned by people. Lower reliance on gasoline, which should result in low gas prices will make traditional gas stations unprofitable to own. There are already plenty of empty one’s today.
Consumers have continued to flock to malls for the experience. As we’ve seen on recent Black Friday’s, they often still go home to do their shopping online. Even Manhattan and the famous Fifth Avenue has seen vacancies rising to 20% and rents falling. We may see some consolidation in bigger department stores. Such as Apple in Walmart. The others who want their own physical presence are likely to dramatically shrink their footprint, which means fewer malls, with much smaller stores.
We just don’t need office space anymore. At least very rarely. In fact, in this HBO documentary on Warren Buffett, Charlie Munger says the best office is one with a sole 80-year-old guy working the numbers. Anything else is waste. If old school titans like this don’t see the need for office space, then don’t expect the next generation of entrepreneurs and businesses to value it highly either.
Between Uber Eats and all its competitors, as well as robotic delivery vehicles that can bring gourmet meals and drinks to your door, we’ll need to eat out a lot less. Even the restaurants that do stay will need a fraction of the space as they continue to automate everything from ordering to food preparation.
Without needing to travel for business much anymore, how many business hotels will we really need? If we are building fewer of the above properties, then we’ll need far, far fewer rooms for traveling workers too. How many fewer rooms will be taken up? What will the split of that remaining pie be between Airbnb and new hotel brands?
There’s one thing that isn’t changing. That is the need for a place to live. The above property uses may be incorporated into multifamily properties in a small and sustainable way, increasing tenant retention even further. Though, if you are investing with a 3, 5, or 10-year horizon or longer, multifamily seems like the safest move. As more investors realize this, and demand for these assets increases, they will see even larger jumps in value too.
ABOUT THE AUTHOR
Bill Zahller is the President of Park Capital Properties and resides in Asheville, NC. As a Multifamily Real Estate Investor and Syndicator, he founded Park Capital Properties in 2016 after 14 years involvement in real estate investment. He works with accredited investors and professionals who are interested in real estate investment, diversification, and financial freedom.
Bill has been flying since high school. His father was a Naval Aviator and Captain for TWA. Bill has been flying professionally for over 25 years, 23 of those at his current company. He has accumulated over 12,000 hours and 7 Jet type ratings. He has also held Instructor, IOE Instructor and NRFO pilot positions with a large fractional flight company. He is currently flying the Global 6000 in a long range mission capacity. This keeps it interesting – one week its Beijing or Sydney; the next Rio or Rome.
Bill is also the founder of the Asheville Multifamily Investor Club. Visit www.ParkCapitalProperties.com for more information.