The global pandemic rages on, but multifamily developers and owners continue planning for the future. With nearly one-quarter of the U.S. population consisting of Gen Z, developers need to prepare for the next 10 years of first-time renters. But balancing future renters’ lofty expectations with a price point they can afford will be a challenge.
“Every generation has specific characteristics. This generation is really attuned to community and equality,” says Ricardo Rivas, CEO of Allied Orion Group, a Houston-based management and development company. “It’s going to have to be more targeted toward common areas and socializing.”
Younger renters’ desire for community is exemplified by the recent trend of co-living. Yet, not every new building should be designed for co-living, or designed for a single demographic. Furthermore, not all young renters want to live in a co-living property (in fact, many don’t want roommates, according to Rivas). Thus, developers are fostering community and socialization in more traditional settings that will also appeal to future generations. This means doing away with common rooms of yesteryear and trading it for engaging indoor and outdoor spaces.
“One of the projects we are doing has space for food trucks to show up. We’ve even thought about having bars in our buildings,” Rivas continues.
Convenience, Proximity, Walkability
For a generation raised with on-demand services and moving to urban and high-density suburban areas, convenience is going to be a huge factor, both within the building and in terms of location.
“Convenience is No. 1,” explains Stephanie Yonan, investment associate with Allied Orion’s development team.
According to the 2020 NMHC/Kingsley Resident Preferences Survey, top considerations for renters younger than 25 are proximity to work, proximity to their university, proximity to local businesses, and walkability. The good news for developers is that these trends are largely echoed by older demographics meaning they can appeal across the spectrum. The numbers also show a move away from city centers and toward suburban areas, especially when they can be close to work.
“You have a lot of major companies coming [to the suburbs]. Renters are moving where their employers are, and that could be anywhere,” says Yonan.
There are many other convenience factors to be considered, especially in the suburbs. “We are looking for walkable retail in our project. We want renters to feel like they don’t even have to cross the street to get to retail nearby,” Rivas elaborates.
The value of these conveniences has been amplified by the COVID-19 pandemic. As residents cannot or choose not to go out, services like food delivery are all the more important, according to Yonan. “When we do our developments, we look to see what food delivery services operate in the area, how close is it to a coffee shop, if the local grocery stores deliver, if there are local doctors’ offices that will partner and even make house calls.”
Partnering with ride-sharing companies is another great way to foster convenience. Yonan explains that one of its properties partnered with Uber to set a flat rate to anywhere downtown.
Technology Plays a Key Role
Conveniences and proximity can build community and spawn the social opportunities that Gen Z craves. But how can you also bring this within your buildings? Rivas says that an app is the answer. Community managers can easily promote events and push notifications. Partnerships with local companies to host on-site activities, like wine tastings, or external events, like a meetup at a bar, are also great ways to create community.
As Gen Z transitions from college to the workplace, their introduction to professional life will also likely look different from previous generations.
“Being able to work from home will probably be an expectation for this generation,” Rivas states.
Co-working spaces as well as in-unit office space will become crucial. As Yonan explains, open co-working spaces are not enough anymore. Additions like coffee machines, outdoor workspaces, and call boxes so that residents can have privacy are several ways to up the game.
Along these lines, connectivity is more important than ever. According to the NMHC/Kingsley survey, high-speed internet access and reliable cell service rank among the top amenities for Gen Z, with 48% saying they would not rent without the former and 46% without the latter.
As for the more traditional amenities, like fitness centers and dog parks, the interest is still there, but the approach is very different.
“They truly want to be active and live a 24-hour lifestyle. We are looking at making fitness centers and amenity centers available after hours,” says Rivas.
The freedom to work out as they please and on their time can be achieved through having more open exercise space, including outdoor space, as well access to on-demand fitness programs, explains Rivas. In fact, Gen Z ranks among the most interested group in live fitness classes, on-demand classes, and yoga, according to the 2020 Resident Preferences Survey.
Thinking Beyond the Fitness Center
Access to nature and fitness opportunities outside of the traditional on-site gym are something Gen Z will respond to. One way to do this, according to Yonan, is for developers to “bring the outdoors in.” This can be anything from rock climbing walls to on-site walking and biking trails. More outdoor pathways between amenities and buildings are features that residents really enjoy.
“Pets are really the new children,” Yonan says. Residents expect to have anything they might need right on the property. In branching from the traditional way of looking at pet amenities, Yonan notes that they now have “two pet parks: one for smaller pets and one for larger pets.”
With all of these expectations, how can developers create a product that a generation of largely entry-level workers can afford? Yonan says that smaller units are the answer.
“This generation is not huge on roommates,” Yonan adds. Therefore, developers should focus on smaller one-bedrooms. “We are leaning toward more units, because when you bring down the size of the unit, it won’t cost the renter as much.” And this benefits the developer too because even if they are charging less rent per unit, they are fitting many more units into the property.
Will Gen Z be OK with less space for themselves? Rivas says yes. “They’re OK with smaller apartments so long as the amenities they expect are there.”