Gina Baker Chambers Shares Multifamily Insights at Bisnow Conference

MCB Real Estate President Gina Baker Chambers was a guest panelist at Bisnow’s Mid-Atlantic Multifamily Annual Conference on December 5, 2024, where she was part of a panel titled, The Executive Outlook: Strategic Visions for the Future of Multifamily Real Estate. Sharing the stage with several other industry peers, Gina provided her insight into several topics relevant both to the region’s multifamily sector, and the overall commercial real estate world.

Below, Gina offers her insights on key questions being asked across the multifamily sector, providing a deeper look into her strategies for navigating the challenges and opportunities in the market.

1. How are macroeconomic factors, like fluctuating interest rates, inflation, and economic uncertainty, affecting multifamily development, acquisition, and operations?
Elevated interest rates have had a significant impact on multifamily real estate, resulting in increased construction and financing costs. In the D.C. metro area, for instance, we’ve seen six straight quarters where transaction volumes fell below $1 billion—a record low for the past decade. Inflation, meanwhile, continues to squeeze margins. Construction costs remain high, and operational expenses, particularly payroll and insurance, are often outpacing rent growth. That said, investors are cautiously optimistic as they await greater clarity around the new administration’s economic policies that could impact the sector. Wall Street is responding positively, and consumer sentiment is up, which is reflected in higher traffic and confidence among homebuilders.

2. How are you planning for long-term changes in tenant preferences, demographics, and the economy?
Adapting to tenant preferences is critical, and technology plays a big role in that. We’re focused on making our properties tech-forward with features like access-controlled entries, Wi-Fi-enabled thermostats, and frictionless payment systems. But it’s not just about the units themselves as common areas are also evolving. Spaces for coworking, video conferencing rooms, and perks like complimentary refreshments are highly valued. We’re also prioritizing convenience and safety with amenities like secure 24/7 package rooms, EV charging stations, and over-the-top vending options. Walkability and access to paths and trails are increasingly important, so we’re leaning into mixed-use developments to meet those needs. Ultimately, the goal is to maintain properties that are clean, fresh, and safe, ensuring we’re the best in our competitive set.

3. What opportunities and risks are unique to the multifamily market in the metro DC region?
The D.C. market is stable, which is a significant advantage over other regions. With effective annual rent growth of 3.5% and declining vacancies, it’s a strong environment for investments, particularly in workforce housing. On the flip side, we face risks like high construction costs, which are exacerbated by interest rates. Federal workforce reductions could also impact middle and upper-middle-class housing demand. Lower-tier properties present a different challenge, as post-COVID credit issues and stricter eviction policies make tenant qualification harder. We’ve also seen a rise in fraudulent applications, which can disrupt operations. Finally, regulatory concerns, like rent control, add to the complexities multifamily operators are navigating.

4. How are you staying competitive in a dynamic market environment?
It’s all about staying informed and agile. We consistently monitor the market, working with multiple reputable management companies to test new concepts and leverage their insights. Encouraging our team to innovate and experiment is also crucial. Beyond that, we focus on fundamentals: getting the right people in place, maintaining exceptional properties, setting competitive prices, and ensuring effective promotion. These basics are the foundation of staying ahead in a competitive landscape.

5. The Federal Reserve’s recent interest rate cut is impacting construction costs and transaction activity. How are you adjusting your strategies?
We’re taking a proactive approach by filling our pipeline with shovel-ready projects. This way, we’re positioned to move quickly when the market environment becomes more favorable for new development. Being prepared is half the battle.

6. How are you preparing for potential economic shifts or further rate cuts in 2025?
We’re keeping a close eye on a few key indicators. Tax policy changes, tariffs on construction materials, and evolving regulations are all on our radar. For example, adjustments to stormwater management or wetland permitting could streamline development timelines and reduce costs. We’re also watching employment data, consumer confidence, and interest rate moves from the Fed. These factors will shape our strategies as we navigate the coming year.

7. Do you have any new developments planned? How are today’s challenges impacting your pipeline?
Today’s environment continues to present challenges, and we’ve already talked about two of the biggest: inflation and rising interest rates. They have made underwriting to appropriate risk-adjusted returns a challenging exercise and have stalled other projects. That said, investors are getting anxious about missing out, and the lull in construction starts is beginning to nudge projects forward. Supply chain issues are no longer the bottleneck they once were, but construction costs remain stubbornly high. Operating costs like real estate taxes and payroll are rising faster than rents, which continues to strain margins. Tariffs and potential labor shortages could exacerbate these issues.

8. How do you balance local market dynamics with a broader, long-term investment outlook?
We’re leveraging the lessons we’ve learned in the Mid-Atlantic market to identify opportunities in high-growth regions. While many of these markets are currently oversupplied, we see that as a short-term trend. Building relationships with developers and operators in these areas now will position us to act when the markets stabilize. Long-term growth potential is the key focus.

9. What property types or design trends are shaping your strategy?
Mixed-use developments and workforce housing are top of mind, especially in locations with high barriers to entry or near grocery stores. Our approach is about simplicity and value—focusing on medium-level projects that balance functionality with a touch of appeal. We’re not overreaching on luxury because maintaining a strong value proposition is essential. Markets with high real estate taxes but incentives like sustainability programs or tax credits are also appealing because they align with our broader goals.

10. How are you addressing the affordable housing crisis?
Acquisition has been an effective strategy for securing naturally occurring affordable housing (NOAH). By partnering with state and local jurisdictions, we can explore tax relief options to keep these properties affordable while making necessary investments to maintain them. Public-private partnerships are also a critical part of the equation for addressing the affordability crisis in a financially viable way.

11. What’s one key lesson from 2024 that will influence your approach in 2025?
Flexibility is everything. This past year reinforced the importance of being able to pivot when circumstances change. We’ve also leaned heavily into longer-term financing strategies, which proved invaluable on several projects and will remain a core focus. I think one of the main points to keep in mind is that the fundamentals of real estate haven’t changed—good properties in good locations, operated at a high level, will always perform well. That’s where our energy will stay as we move forward.