08 May Multifamily Trends: Should We Be Thanking Millennials?
The multifamily sector is one that normally remains strong. As the population in the United States grows and the economy changes, one thing remains constant, people need a place to live. In the past 5 years, there have been varying trends that have impacted the multifamily sector as a whole, mainly due to the generation that make up the majority of current renters.
Millennials are the largest generation of renters and have been for the past 5 years according to a study by Yardi Matrix. They are poised to remain the main multifamily tenants until at least 2024. However, their upbringing, unfortunate debt rate, and lifestyle preferences have created some interesting trends. These trends have ultimately impacted the sector in the past 5 years and can be seen below.
- Affordability and Decline of Home Buying
One trend that has surprised economists and real estate professionals alike, is the alarming rate in which young people aged 25-37 are not buying homes. The current student loan debt is more than $1 Trillion, and adults are not able to save as much as prior generations were. This has caused a boost in renters looking for affordable luxuries in the multifamily sector.
Additionally, immigration has also increased, and studies show immigrants throughout all age groups are more likely to rent than buy homes. Overall this is a positive for the multifamily sector as this trend is on an upward swing.
- Smart Units
This is a key trend that has emerged in the past 2-3 years. The integration of “smart” tech in multifamily units not only increases the value of the property, but can also attract tenants. Studies show gadgets such as Alexa, smart locks, smart appliances, thermostats, lighting and more have all become major selling points for tenants. These additions can provide benefits for tenants such as added conveniences, sense of security and more. On the management side of things, smart tools can assist in keeping a property running smoothly, keeping utility costs low, streamline tenant communications, and making scheduling repairs easier. (If you want to read about more ways to make your multifamily properties ‘smarter,’ check out my other article -> Smart Complexes & Smart Profits)
- Amenities, Amenities, Amenities
Within the trend of affordable luxury, is amenities. Common areas are being redesigned to give tenants usable space. Rooftop decks, yoga rooms, cafes, flexible workspaces, pet washing stations and more have become commonplace. The “amenities arms race” as some are calling it, is a fight to see who can provide residents with the best amenities, while keeping costs at a reasonable rate.
- Connectivity is Key
10 years ago the internet was a luxury rather than a demand. Now, providing fast and reliable WiFi is a major trend in multifamily. As 5G capability approaches, we will want to keep an eye on this trend to observe how it evolves in the next few years. Additionally, buildings that are wired for optimal connectivity can pull in more revenue, making it something landlords and investors should make a top priority when updating building capabilities.
- Delivery Reimagined
With the recent advances in e-commerce and how packages, groceries, and even take-out food is delivered, we will have to reimagine the way we handle delivery of all types. This trend stands out because it touches on many categories. Because tenants are receiving online orders at rapid rates year round, Amazon has created apartment locker services. This ensures tenant’s packages are safe, and not left out in hallways where they create clutter or can be stolen.
On another side, pick up and drop off areas for rideshare and 3rd-party delivery services like AmazonFresh, Uber Eats, Postmates and more will also be key. This trend allows tenants to get their orders with convenience and alleviates the struggle of street congestion for delivery drivers.
Overall, trends are always growing changing and expanding. Just five years ago, these trends were mere buds that have now bloomed into major impacts on the multifamily sector. If you’re interested in the multifamily market here in Baton Rouge, give me a call. I’d love to chat about finding a great deal for you – 800-895-9329