It depends on which urban and which suburban area. There is no general statement that one is absolutely better than the other. I definitely can see good suburban projects.
Are there better opportunities in urban or suburban areas?
We have invested in a couple of multifamily developments in urban/downtown areas that have done quite well. We are looking at a couple of other urban multifamily opportunities. However, we have heard that there might be better opportunities in suburban areas and may hold off on these urban opportunities. Are there better real estate investment opportunities in urban or suburban areas? Why?
There is no one answer to this question. The consensus is that certain urban areas have been overbuilt for multi-family. That seems to be the case for upper-end apartments. From what I hear, the growth is in secondary cities, such as Memphis and Columbus. Who are you building for? Millennials seem to be heading to suburbs with children at a later age than before, but that is a pattern to keep in mind. Before you invest, look carefully into the different areas. I have not heard of others concentrating on suburbs.
There is not a simple answer to that question. It's different from market to market.
The answer to your question is rooted in your appetite for risk and need to push returns. Multi-family values are based largely on supply and demand, demographic trends in each market, barriers to entry for new development and purchase price discount to replacement cost. These are probably the key factors in a good investment. But purchasing a property in a strong (primary or perhaps secondary) urban market is usually at a significantly lower cap rate than a tertiary urban market or suburban market, generally due to the factors mentioned above being stronger in urban markets. Thus, you balance risk and reward between the stronger urban markets, wherein investment fundamental is significantly stronger but at higher prices and lower cap rates. Compare this to suburban where cap rates and returns are higher but demographics, demand and barriers to entry trend much lower. A better investment is determined by your risk/reward appetite.