Nov 30, 2022 3 min read Thinking Tools

How fragmented is multifamily?

A visual study of multifamily property management

Did you know that the US search engine market is dominated by three players (Google, Yahoo & Bing) with a 97.29% share?

Let's take another example - the US carbonated and soft beverage industry. Around 66% of the industry's market share is owned by two players (Coca-Cola and Pepsi.)^[1][2]

But for multifamily, it's a different story. Despite a number of high-quality property management companies active in the market, the NMHC Top 50 manage only 15.14% of the total multifamily rental market.

How big is the gap, though?

We created a visualization to understand how NMHC Top 50 measures up with the total rental stock^[3] of 48.1 million units. These include single-family (14.9 million), manufactured rental housing units (2 million), multifamily with 2-4 units (8.3 million), multifamily with 5–19 units(10.6 million) and multifamily with 20+ units (12.3 million).

For our study, we will consider only the total multifamily rental stock which totals at 31.2 million units.

Visualization Controls:

The graphic auto-plays, but you can pause and take a better look at each slide.
You can hover over each rectangle to get more information.

Fragmentation in Multifamily Property Management
Infogram

Let's breakdown the insights slide-by-slide:

Slide 1:

The American Rental Housing 2024 report conducted by The Harvard Joint Center for Housing Studies^[3] puts the number of total multifamily rental stock at 31.2 million units.

Slide 2:

The NMHC Top 50 manage only 15.14%^[4] of the total multifamily rental units.

Slide 3:

The Top 10 NMHC managers manage only 7.55% of the total multifamily rental units.
However, this is 49.89% of all units managed by the NMHC Top 50.

Slide 4:

The top manager manages only 2.55% of total rental units. This is 16.89% of units managed by the NMHC Top 50.
The second largest manager manages only 0.93% of total rental units. This is 36.49% of the top manager’s total.

Endnote

Multifamily is a fragmented industry. Property managers — new and experienced — have plenty of room to build and grow. Multifamily technology companies have many options: They can target the high-end Top 50 market, or target the mid-market segment just below the NMHC Top 50, or target the often ignored small property management companies

How do you look at multifamily fragmentation? Let us know in the comments.