Multifamily Executive Conference 2017: Renting in Today's Market
As one of OMNIPLAN’s multifamily specialists, I attended the 2017 Multifamily Executive Conference. I learned a lot of exciting statistics about how today’s market is changing, so I decided to share a recap of what I learned at the conference.
One thing was very clear at this year’s conference, and it's not new: demographics are changing. In this business, everyone’s goal is to keep residents staying longer at their property, but how do you go about that? We heard statistics which illustrated that, the longer residents stay, the stronger the sense of community for the property and vice versa. In other words, residents want to stay longer in an environment with a strong community. We simultaneously heard stats about how retainage bolsters profitability, so this goal pleases both residents and owners. However, owners need to modify the strategies they’re using to retain residents because of the changing demographics, to take the attributes of today’s renters into consideration. With that in mind, let's look at what we learned about today's renters.
- Prolonged Apartment Living. Young people are staying in multifamily communities longer before purchasing a home. Why? There are several factors here, but it boils down to affordability. John Sebree and Ryan Severino spoke at length about this in their Annual Economic Outlook presentation. If you look at the single-family home market, prices have risen due to a lack of supply, and it's taking young people longer to afford their first home. Millennials are the first generation to make less than their parents, which is delaying marriage and starting families. As a result, they are living in apartments longer into their adult life. This information should aid in tenant retention strategies, but it mainly indicates an increased demand for multifamily housing that includes higher-end communities and state-of-the-art amenities. And it sounds like this demand isn't going away anytime soon.
- Mobile Workforce. Young people today are not necessarily tied down to one city. They are flexible and able to move around. According to the research presented by Brad Hargreaves of Common, new grads today on average have four jobs within the first 10 years of graduation. They are shockingly mobile. This information has directed Common’s business model to allow for easy movement between their properties in different cities.
- Growing roommate culture. We heard a lot of statistics to support the growing market of roommates from keynote speaker Brad Hargreaves, founder of Common. Between 2000-2010, rent increased by 12% and income increased by 7%. Again, the issue of affordability came up because today's tenants are having to spend a higher percentage of their income on housing. Because of this climate as well as better technology to connect people, living with roommates has increased by 20% over the last 10 years.
- Urban living. In almost all the award-winning projects, urban living was the primary focus. I heard one person ask if this was a trend, but I don't think so. It goes back to the theme of community, and Brad Hargreaves had a good statistic that supports this type of development: 18-29 year-olds are 40% less likely to move to the suburbs, preferring to stay in cities longer where rents are higher. I think that’s due to the sense of community that’s created by density and mixed-use designs.
- The Austin factor. “Keep Austin Weird” may be their slogan, but cities like Austin are attracting more millennials than their competition, and we should take note. Ryan Severino noted that markets who are attracting millennials have a very high demand for multifamily. They are also predicted to have the most growth in the coming years. The top five growing cities are: Austin, Salt Lake City, Columbus, Nashville and Denver.
- Sustainable but authentic. I sat at a round-table to discuss the ways multifamily can become more sustainable. Residents are looking for a sustainable place to live. It’s one of the top items when considering an apartment, but I also heard a lot of talk about authenticity. It’s hard to communicate how sustainable a building is because what makes it energy efficient is not always visible. The worst thing you can do to retain residents is to not be honest about the sustainability of their home. Education and marketing can go a long way on this front.
- Anti-Driving. There was an entire panel dedicated to the future of parking. As an architect, I would love to see more building and less space dedicated to parking. Owners agree, because they are spending about $50,000 per space to have underground parking. The statistics presented by Rich Hughes of RealPage supported a future where parking is not as necessary as it is now, and in fact is already changing in areas like LA. Millennials are getting half as many driver’s licenses when compared to 20 years ago. Technology and public transit provide so many other options for getting around, and this generation only has 0.7 cars per household. If they are pet owners, that number jumps to 1.5 cars per household.
“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” - Buckminster Fuller
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