Closing out 2023: Corporate Housing Trends
As we bid farewell to 2023, it is opportune to reflect on the dynamic landscape of the corporate housing industry and anticipate the trends that will shape the path forward in 2024. The third quarter witnessed a challenging economic backdrop, marked by a notable increase in vacancy rates and a nuanced interplay between apartment demand and delivery rates. Against the backdrop of these economic uncertainties, the corporate housing sector faces the imperative to adapt and innovate in response to shifting market dynamics. In this analysis, we delve into the key facets that defined the corporate housing landscape in 2023 and explore the strategic considerations that will be instrumental in navigating the challenges and opportunities that lie ahead.
A Challenging Economy & Its Impact on Corporate Housing
Third quarter 2023 closed with vacancy rates rising to 5.4%, marking a 130 basis points increase from Q3 of the previous year, according to Marcus & Millichap. Although apartment demand has remained positive, it has not kept pace with the record delivery rates. Rent growth has slowed, with a modest increase of 1.7%. The impending surge in apartment construction in 2024 is expected to further elevate vacancy rates across various markets, causing a supply risk in 2024. However, there is a glimmer of hope as construction is anticipated to decelerate in 2025 and beyond, potentially alleviating some pressure on the housing market. To navigate these fluctuations, corporations in need of corporate housing should closely monitor job creation in each market, as it is expected to be a key driver for economic growth in the multi-family sector.
What does this mean for corporate housing?
In light of the challenging trends highlighted in the corporate housing landscape, strategic adaptation is paramount to successfully navigate these elements. Your National partner can guide you with consultative data on job trends and which markets are growth oriented. Additionally, leveraging advanced process improvement, AI and other tools, we are poised to flex to your employees housing needs and budget. Lastly, take advantage of National’s additional business opportunities – corporate travel can house your shorter-term needs through our hotel desk; and Coppergate, our destination services provider, can offer localization services for quick transition and work productivity.
Inflation May Leave Employees Left Out
When employees are provided with a lump sum of money for relocation, the impact of economic factors like inflation can significantly influence their choices. Despite 74% of Americans expressing a sense of financial control, inflation remains a pervasive concern, with 58% citing it as a primary source of financial stress, according to HR Trends. As individuals grapple with rising costs, the allocation of relocation funds becomes crucial. The data reveals that some Americans have curtailed necessary spending, with nearly 20% cutting back on groceries and 59% on standard personal care, suggesting that a lump sum intended for housing may be diverted to essential needs.
What does this mean for corporate housing?
In response to these dynamics, the corporate housing industry may need to adapt its strategies, offering more flexible and cost-effective solutions that align with shifting financial priorities. National Corporate Housing account managers can partner with employers to offer guidance on financial planning during relocation or explore innovative housing models that better suit evolving employee needs. Additionally, we can flex employee needs into our other business units by offering hotel options. Our goal is holistic care of the employee, creating their home, wherever they are.
Customer Experience is King
According to Gartner, 47 percent of HR leaders prioritized employee experience as the top priority for 2023. HR strategies for growing businesses begin with hiring and retention and continue with onboarding and employee productivity. Companies need employees to run their business with roadblocks removed, and this starts with the relocation process. Ensuring a seamless and positive customer experience during relocation is paramount in fostering employee satisfaction, productivity, and retention. Partnering with vendors who share in this value and mission are critical for employee well-being and business growth.
What does this mean for corporate housing?
Considering the heightened emphasis on employee experience and well-being in HR priorities, corporate housing providers play a pivotal role in ensuring a positive customer experience during relocations. In a world where convenience is abundant, there are certain aspects we at National Corporate Housing refuse to compromise. Responsible duty of care remains a top priority. Each apartment is thoroughly inspected by a dedicated team member, guaranteeing its quality, cleanliness, and impeccable condition before employee arrival. Comfort and security may be at risk with apartment aggregators or unknown home share hosts.
Looking ahead to 2024, the industry is poised for transformation, demanding a nuanced response to economic shifts and an unwavering commitment to enhancing customer experiences. In the face of uncertainties, National Corporate Housing reaffirms its dedication to holistic employee care, pledging to not only meet but exceed the evolving needs of our clients. As we embrace the future, we stand ready to navigate the ebb and flow of the corporate housing tide, ensuring that our commitment to quality, care, and customer satisfaction remains unwavering in the years to come.
