Millennials—those individuals born roughly between 1981 and 1996 (giving them an age range of about 24-39)—are a massive force in the rental market that can’t be ignored.
Unfortunately, many developers and property management firms simply don’t understand how to connect with and appeal to millennial renters.
There are a lot of reasons for the outsized impact millennials are having on apartment rental strategies:
- Life situation in flux: In the millennial age range, many adults are still finding their feet, establishing their careers, and trying to settle on a direction in life. Many are getting married late, if at all. All this results in a lifestyle that’s evolving on an ongoing basis. Renting instead of buying allows them to keep their options open.
- Financial struggles: As the gap between average income and average housing prices continues to increase, millennials find it increasingly difficult (or impossible) to come up with the money to make a down payment on a home. In 1990, the average sale price for a house in the United States was $150,100 and the average household salary was $55,952, making a 10% downpayment equivalent to 3.7% of annual salary. In 2019, however, the average sale price was $380,300 and the average household income was $63,179, making a 10% down payment equal to 16.6% of annual salary, more than four times what it was in 1990.
- Rent-oriented lifestyle: Millennials are accustomed to renting across most areas of their lives, including transportation (Uber, Lyft), short-term housing (Airbnb), workspaces (WeWork), entertainment, software, clothing, and even basic household goods. The flexibility and perceived low cost of renting (compared with the daunting numbers involved in buying) have removed much of the stigma previous generations had regarding renting.
- “Rent forever” mentality: A rising number of millennials plan to be “forever renters,” citing reasons related to finances, flexibility, convenience, and risk-aversion. Some have referred to them as Generation “YBuy?”
The end result is that 60% of millennials choose to rent instead of buying their home, and millennials are among the most willing of all demographics to live in an apartment building.
However, many multifamily developers are trying to meet this significant rental housing need by simply cranking more of the same old-fashioned apartments they always have. Property management firms, to add, fall back into old tried-and-true routines instead of adapting to the unique needs of this fast-growing market.
Whoever’s best at attracting the millennial market is going to win the multifamily game. It’s that simple.
So what are these millennial renters looking for?
Here’s a quick summary of key points from recent research and thinking regarding the key features and characteristics sought by millennial renters in their next home:
- Pet friendliness: With an increasing number of millennials directing their nurturing instincts toward pets instead of having children, the need for pet-friendly apartments is more pressing now than ever.
- Luxury experience: Having grown up with the benefits of economies of scale, millennial renters are accustomed to a certain amount of upscale aesthetics and refined experience as simply being normal and expected. Open floor plans, large windows, quality appliances, quality fixtures and finishes, and curb appeal are essential, as are beautiful and well-maintained common areas.
- Environmental considerations: With millennials feeling more stewardship over the world in which they live than did previous generations, it’s hard for them to live on a property where they see environmental damage being done every day. Recycling, improved insulation, energy-saving lighting, low-flow toilets, water-saving showerheads, and other similar features can help millennial renters feel more comfortable with the environmental footprint of your property.
- Smart home technology: A generation that grew up with phones in their hands feels disconnected if they can’t remotely interface with the place where they live. In-unit amenities like smart lights, smart locks, smart thermostats, motion sensors, and door contacts not only deliver a luxury-feeling experience and more environmental friendliness, but also help them feel connected and safe. (Multifamily smart home providers like SmartRent, LittleBird, and Dwelo can help deliver a connected package for your property.)
- Outdoor recreation: Millennial renters tend to value a balanced lifestyle, and that means getting out of the city sometimes. Even if you don’t happen to be located in an outdoorsy region, you can still point out local parks and trails, provide information about nearby state parks or wilderness areas, and even organize group hikes or other outings.
- Mobile resident experience: Residents should be able to use their phones to pay rent, reserve amenities, submit maintenance requests, read management announcements, and discuss topics with other residents. If you’re still using a busted old web portal for these features (or worse, don’t have them at all), you’re overdue for a tech upgrade.
- Access to public transportation: Like many are opting out of buying their homes, they’re also opting out of buying cars if they can avoid it. Access to local public transportation is essential.
- Distance to shopping and entertainment: With millennial residents trying to avoid excessive driving, proximity to local destinations becomes a key factor.
- True sense of community: Millennial renters want to be connected to the people and institutions around them. They want to know their neighbors. They want to shop locally. They want to feel roots and a sense of place, and you can deliver that through a community-oriented resident experience supported by great resident technology.
It’s easy to take these things for granted and assume that what worked before will work again, but the most forward-looking developers and property managers have already seen which way the wind is blowing, and they’re jumping on top of these things. If you want to stay in the game, you should too.