As modern apartment living becomes a longer-term and preferred choice for both younger and older generations, it’s clear that property owners and operators will face challenges in differentiating their buildings. Like any industry, there are a number of recent demographic, economic, and behavioral shifts that stand out as having a meaningful impact on housing trends and apartment buildings of the future.
Here, we’ve highlighted five emerging trends that multifamily owners, developers, and property managers should pay attention to if they want to stay ahead of the curve.
1. Millennials are driving demand for modern multifamily residences outside of city centers.
As baby boomers look to downsize, their large, multi-bedroom homes are being sold at steep discounts. The reason: millennials aren't interested in buying huge houses and instead favor smaller, more minimalist alternatives. Due to mounting student debt and people choosing to marry and have children later, young professionals are more interested in affordable suburban housing options over homeownership.
However, these modern renters aren’t prepared to sacrifice their city lifestyle, and they’re seeking areas that provide the same modern conveniences and amenities as their urban counterparts like easy transit access, strong walk scores, and an abundance of retail, restaurants, and recreation. Progressive, suburban communities across the country have been meeting this demand—cities like New Rochelle, New York and Tempe, Arizona are on that rising trajectory —and have been nicknamed “hipsturbias” for their ability to attract young residents.
For developers, suburbs that successfully attract a critical mass of “hip” residents will present new opportunities to build Class A properties outside of urban epicenters.
2. The e-commerce and two-day shipping boom is changing multifamily package delivery.
According to a 2019 report by Adobe Analytics, Cyber Monday saw nearly $9.4 billion in online sales—a 19 percent increase from the previous year. In response to this e-commerce boom, stolen packages are on the rise as delivery carriers struggle to keep up with the growing volume of items.
In 24-hour cities like New York, nearly 15 percent of deliveries in major cities fail to reach the recipient on the first attempt due to theft or human error. To help solve this problem, many property managers and residents are turning to creative and often costly solutions, from personal lockers to video doorbell cameras, to keep thieves at bay.
But with soaring package volume in today’s internet economy, these may not be sustainable strategies as lobbies and package rooms continue to overflow. Package lockers are also costly—typically running at least $30,000—and also require enough space, Wi-Fi, and electric wiring, running installation costs even higher.
For owners and developers, secure package delivery will continue to be at the top of residents’ expectations, with 84 percent of renters considering 24/7 package access a top community amenity.
3. Residents will pay a premium for connected smart home experiences, but they also want their data to remain private and secure.
By 2023, the market for voice assistant devices is expected to reach 8 billion (up from the 2.5 billion at the end of 2018). With market penetration driven by giants like Amazon, Apple, and Google, many renters have grown accustomed to their voice assistants and other “Internet of Things” devices. In a recent study by the National Multifamily Housing Council, one-third of renters already own these devices, and some won’t rent an apartment without connected, smart home features.
However, while residents insist on more and better technology, there’s also demand for greater privacy and security. The reason: more than ever, property managers use technology to make residents’ lives easier—from online payments to access and more—but they aren’t always transparent about the personal information they’re collecting and how they’re using it.
For owners, it’s imperative to consider what systems are in place to protect resident privacy (while also allowing property managers to do their job) and how different smart home technology solutions are designed to safeguard against cyber attacks or system failures.
4. Experiences—over amenities—will influence resident retention and satisfaction.
By 2030, NMHC expects over 4.6 million apartments will be added to satisfy the growing rate of multifamily housing demand. With so much competition among high-end, over-amenitized Class A buildings in tier one cities, today’s developers have had to look to lifestyle trends to innovate and stand out.
In lieu of gyms and rooftops, it’s clear that residents place more value on convenience, citing technology and services as more favorable features when considering where to rent. However, in today’s estranged digital age, residents also want community and human interaction more than ever—and they’re looking to their building to help foster that connection through various events and experiences. As one senior associate at Delta Associates put it: residents want buildings to bring in a yoga instructor, not just create a yoga studio.
For owners and property managers, there’s a strong case for turning physical spaces like rooftop gardens and fitness centers into venues for social gatherings. Providing premium living experiences that link residents together not only provide new revenue streams, but also contribute to happier, more connected communities.
5. Younger residents are more open to short-term rentals and co-living.
There’s a new wave of residents who are drawn to the live/work/play lifestyle that “hipsturbia” cities have to offer. And with so much to take advantage of, these millennials are also proponents of the sharing economy, which includes more flexible living arrangements.
This flexibility is even more important to younger renters. According to NMHC, views on short-term rentals are strongly correlated to the resident’s age, with 45 percent of younger renters (ages 25 and under) expressing interest in this arrangement. This makes sense because renters in their 20s and 30s want to save on cost, but it’s equally important for them to find a living environment with a group of peers sharing common interests and values. While co-living might just seem like today’s modern version of “Friends,” 82 percent of Generation Z renters reportedly live with someone else.
As multifamily owners look to diversify their buildings and engage younger generations, they should consider flexible living options like short-term rentals and co-living to draw interest and stand out.
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