The U.S. population is getting older and more diverse, with a growing demand for multi-family housing. Empty-nesters are looking to downsize, millennials are not purchasing homes at the same rate as previous generations and more people are opting for a more convenient lifestyle. Demographics and lifestyles are shifting and developers will have to serve a variety of households and housing needs to keep up.
Now that cities have started to rebound after the Great Recession in 2008, we’re seeing a migration trend of residents moving to markets like Dallas, Tampa, Denver and Charleston due to increasing job opportunities and vibrant cultures. Investors are flocking to these destinations because new properties are going up and rental markets are booming.
As demands for rent continue to rise, investors should look to investing in multi-family property. The key is looking at emerging markets for the two most significant demographic groups for renting – baby boomers and millennials – and a desire for more personalization in housing.
Here are three key takeaways to know about demographic shifts, technological advances and lifestyle choices:
- According to the National Multifamily Housing Council (NHMC), baby boomers accounted for 58.6 percent of the net increase of renter households between 2006 and 2016.
- Historically speaking, young people have been the age group most likely to rent. However, millennials are settling down later and later, staying in the rental zone much longer. Additionally, 23 million of them are still living with their parents or unable to leave home.
- In 20 years, millennials will be in their late 30s and 40s. This marks a different phase in their life cycle where they’ll be set to enter homeownership, leaving the non-rental zone. The next demographic to look to will be seniors, as the bubble of aging Americans expands.
Technology & Design
- Smart technology will become a bigger part of consumer life, transforming how and where people live. Buildings with interactive technologies for security, maintenance, appliances and even lighting are major selling points for renters.
- With more employees having the option to telecommute, residents will favor working close to the office and have amenities within their apartment communities to provide comfort and efficiency while working.
- Multifamily housing communities will look to provide better spaces for people to work, where underutilized spaces will be converted into high-tech co-working lounges with shared work tables, coffee stations and office equipment.
- By 2023, experts suggest that 90 percent of the U.S. population will use a smartphone to connect to the grid. Apartment buildings will start to accommodate for food delivery services via UberEATS, GrubHub and Postmates, and easier package pickup from online purchases.
- E-commerce is outpacing the broader retail industry, forcing many shopping malls and major brick-and-mortar retailers like Macy’s and Sears to close its stores. Developers are now repurposing this land into a variety of uses, including mixed-use projects with shopping, dining, medical facilities and residential living.
- When it comes to the future of multifamily housing, lifestyle is becoming just as important as location and layout. Creating a sense of community with activities, public parks, farmers markets and even outdoor exercise will be a selling point valued by many renters.
- Gyms have been a staple in apartment buildings for quite some time, but today’s idea of fitness has evolved to include a full wellness experience that encourages a healthy lifestyle. Renters are moving toward environments that focus on physical, social and emotional health. A surge of multi-family houses are near health clinics and teaching hospitals to accommodate baby boomers who want to live near doctors.
- More renters are moving to areas that are walkable and have multi-modal options, relying on personal vehicles less and less. Rideshare services like Uber and Lyft are changing the way residents commute, adding another option for how people get around.
Investors should take note that tomorrow’s multi-family housing needs don’t just fulfill a basic need. It has become an extension of how people view themselves and their values. Younger segments of the millennial market along with baby boomers will steer the multi-family sector into high-opportunity areas. Living habits are changing in a big way for renters.