Multifamily is embarking on a new era. It's vibrant, diverse, multilayered—just like the people who call these communities home. In fact, in 2022, it is those renters who will shape—or perhaps reshape—the industry. In the coming year, multifamily owners and developers will be charged with envisioning and creating communities that meet renters where they are.
At Streetsense, our in-house experts have been watching the industry closely as it has held its breath and exhaled throughout the rigors of the pandemic. When projected outcomes like stabilization of the industry came to fruition, while others, like a decline in resident retention, thankfully did not, we got to work assessing how it would guide the industry forward.
With the whirlwind of 2021 nearly in the rearview mirror, the multifamily industry has strong indicators to build on. National economic rebound and fiscal stimulus are big drivers of multifamily performance, and CBRE recently increased its 2021 GDP outlook from 4.9% to 6.7%. For 2022, CBRE expects strong GDP growth of 4.2%. Also notable are changing demographics: Streetsense director of research Anya Chan reported that over the past 10 years, the number of middle-aged and senior renters grew by 43%. Additionally, Chan noted that renters today are generally more educated and have higher incomes, with 28% having a bachelor's degree or higher, and median household income up by more than $12,000 since 2010.
So, what does it mean to develop renter-focused communities? We've identified four areas of multifamily where developers will take the lead in 2022.
1. Distinct Branding
In the not-so-distant past, multifamily brands began taking a cue from the hospitality vanguard, leaning toward centralized branding. Think: one name for multiple properties, perhaps with the name of the city attached for differentiation. While brand recognition is still as critical as ever, its application shifts when it comes to multifamily. Here, individuality, not homogeneity, tells a brand story that stands out to potential renters. Streetsense senior account director Amy Goff pointed out one simple yet critical benefit of this hyperlocal approach to branding: "It differentiates each property in a sea of competition."
When a client comes to us with a new development project, we do a deep dive into market research, demographics, and competitors to develop a brand vision that is acutely tuned into both the property's location and the renters it aims to attract. And we underscore the necessity of making this vision accessible to and clearly laid out for all stakeholders so that everyone is on board to implement it during property development.
2. Thoughtful Amenities
The word "pivot" has become part of the multifamily lexicon since 2020. Plans that had been in place for years were either abandoned entirely or greatly altered, and trends shifted with light speed. For example, pre-COVID-19, micro-units were hot; now, it's all about space. With the pandemic as a headwind, we saw renters increasingly seeking homes in Tier II markets, like Austin, Texas; Las Vegas; and Nashville, Tennessee, away from crowded urban centers.
Amenities have always been a priority, and multifamily companies are already stepping up their game when it comes to entertainment and fitness. Look for options like golf simulators and climbing walls. Outdoor appeal will be front and center too, with a focus on curated spaces that will wow, like beautifully manicured greenspace, lounge areas that can double as outdoor workspace, and even hiking trails within the community's boundaries.
Developers have already capitalized on the ROI of pet-friendly policies. However, in 2022, they'll court pet owners from a new angle—with a subtle nod to the emotional benefits of owning a dog. Look for souped-up dog parks, bona fide pet washing stations, doggie day care options, and pet walking services for resident pooches. Amenities like these also contribute to a greater sense of community, which in turn boosts retention.
3. Flex Space
When people couldn't leave their homes, they turned to DIY. Corners and nooks that were previously occupied by stylish storage cubbies, minimalist sideboards, and the like were transformed into Zoom rooms, prayer/meditation dens, and yoga studios. People also turned toward expressing their creativity in their homes. In 2021, Etsy reported a whopping 95% increase in searches for wall art.
It's clear that quarantine redefined the perception of place. What we saw in 2021 informed the evolution of home that we envision for our clients in multifamily. In 2022, multifamily owners and operators will position home as much more than a well-appointed space accompanied by options for live, work, and play. Amenities will speak to a shift not only in the industry but also in our world itself: Home is now a lifestyle experience with next-level personalization. Flex space will emerge as developers desire to meet renters where they are. Look for apartments and condos with built-in flexibility for tenants to design—and redesign—their interior spaces as they please.
4. Innovative Marketing Technology
Given the new paradigm for not only working remotely but going about daily life remotely—in the form of no-contact delivery, grocery, and shopping apps, etc.— the multifamily industry has kept pace nicely. Properties now commonly offer virtual tours, digital lease signing, and payment apps. We'll see even more from marketing technology moving forward, with greater focus on convenience: automated services for package delivery, including refrigeration for groceries; digitized request and fulfillment for maintenance; keyless home entry; and apps for in-home energy efficiency.
However, it gets complicated as we look forward: While renters place high value on the convenience of technology, and many renters are completing the entire leasing process digitally, they still want human interaction. It's critical for prospects to talk to a real person, and early on in the funnel is best. Here, multifamily developers are challenged with finding the right blend of virtual and vis-a-vis services. We're projecting changes both visible and procedural, including smaller leasing offices and virtual meetings between prospects and leasing agents.
Moving Forward
The past year (and then some) has been all about the pivot. Through unprecedented market shifts and industry curveballs, we remained steadfast—guiding and supporting our multifamily clients. Together, we discovered a new commitment to the renter that we believe will remain a guiding force in the industry going forward.
