Multifamily Executive Special Report: This is the third and final installment in a series of articles investigating the myths and realities of three demographic groups that promise to drive demand in the apartment industry.
Check out
Part 1 of Myth Busters: The Immigrant Experience and
Part 2 of Myth Busters: The Gen Y Phenomenon.
STEPHANI L. MILLER and Nadia Asfahani Brooks became good friends in high school. When both settled in the Washington, D.C., area after attending different colleges, the pair spent little time renting. In fact, both eventually chose to live at home. And when they finally moved out on their own, it wasn't to apartments. It was to a condo complex in Huntington, Va. First, Miller bought in 2001, when she was 24. A year later, Brooks followed, at the age of 25.
For Miller, the decision to buy was a no-brainer. At the time, a mortgage payment in the D.C. area was cheaper than rent—and she could build equity. What's more, unlike the generations of women before her, she could buy. “We have more options than our mothers and grandmothers,” she says. “Their options were, basically, live with your parents and be an old maid or get married. We have so many more options. We're employed at almost the same level as our male counterparts, and we recognize a home for the investment that it is.”
Brooks, too, found that owning made as much sense as renting. “It was something that I knew was mine,” Brooks says. “To know that I could make it on my own, as opposed to needing to have somebody.”
Unfortunately, few apartment owners are aware of the preferences of Miller, Brooks, and women like them—the Sex and the City generation of single women between the ages of 20 and 34, who number roughly 14.9 million in the United States, according to the U.S. Census Bureau. Nationwide, roughly 16.4 million single women of all ages are heads of households; 6.7 million (40.9 percent) of those women are renters. Single men, in contrast, are heads of fewer households—owned or rented. While apartment executives have been preparing for the arrival of Generation Y and addressing growing demand from immigrants, many seem to overlook single women as a demographic group with its own preferences. And as such, they may be missing a golden opportunity. Perhaps it's because the numbers suggest women are more likely to buy than rent at a younger age. But there are ways to capture single women in the rental pool through careful design and security features, so long as you don't perpetuate the stigmas they face in the market.
This is the third in a series of stories exploring the myths and realities of three demographic groups that promise to drive multifamily demand over the next decade. MULTIFAMILY EXECUTIVE examined the trends and data and culled anecdotal evidence from apartment executives in the field to discover what it takes to court affluent single women.
Apartment owners don't understand single women.
The truth is that single women are an especially attractive pool of potential residents. They are more prone to saving, better educated, and form more new households than their male counterparts. They graduate from college at higher rates than men—about 33 percent of women 25 to 29 had a bachelor's degree or higher in 2007, compared with 26 percent of men in that age range, according to the U.S. Census Bureau. And there are 14 million female-headed households with no spouse present. Yet the apartment industry hasn't seemed to notice.
Many of the apartment REITs and large private firms contacted for this article said that they hadn't “specifically targeted” or “specifically focused on” single women. “We haven't undertaken and haven't specifically observed a lot of new research or thinking about this,” says Laura London, managing director of marketing at Kettler, a Washington, D.C., area apartment developer. “This is something we should know more about in real detail than we do. I don't know why people haven't investigated it further.”
For its part, the team at AvalonBay Communities, an Alexandria, Va.-based REIT with 48,158 units nationwide, is cognizant of the demographic and psychological shift. “The empowerment of young, single women to make a housing decision today versus a generation or two ago is clearly an important component of what we have to target,” says Christopher Payne, vice president of development for AvalonBay.
The Bozzuto Group, a Greenbelt, Md.-based apartment builder and owner with 70-plus properties, works to make sure its designs do not look too masculine and thinks its peers are doing the same. “We always think about the female renter,” says Julie Smith, president of Bozzuto Management Co., the firm's management arm.
Still, others see women making the bulk of the housing choices. “Whether it's single women, couples, or roommates, we see in a vast majority of cases, they're the decision makers,” says CEO Larry Connor of The Connor Group, a Dayton, Ohio-based firm that owns 14,000 units in North Carolina, Ohio, and Texas. Research backs this up, especially in the for-sale sector. Suzanne Horton, president and CEO of Be Jane, a Web site that encourages women to take on do-it-yourself (DIY) projects at home, says 91 percent of the decision makers in the home buying process are women.
Since seeing the influence of women in choosing apartments, Connor has honed his firm's overall strategy over the past few years. “When we're doing acquisitions, we're looking at niche markets or submarkets that we think would be attractive to women,” he says. The strategy also extends to Connor's marketing plan. The company includes lifestyle information, such as restaurant and shopping recommendations, on its Web site. “In the design of our Internet marketing, we really try to put some emphasis on women,” he continues.
That mentality continues into the units. In fact, when The Connor Group launched a $20 million rehab program for 3,000 units, it test-marketed different types of products on women. The men in the company wanted cherry cabinets and black appliances. But when the women showed a preference for stainless steel and natural wood, that's the direction the company went in.
London says Kettler tries a similar design sensibility, appealing to women by mimicking luxury hotel spaces found in places such as New York. “We look at hotels and [their] lobbies—at the choice of materials and color schemes,” she says.
Single women would rather own than rent.
Perhaps the reason apartment owners aren't focused on single women—especially when compared to their interest in Gen Y, for instance—is because single women demonstrate a much greater propensity to buy than other demographic groups.
“If we find that younger women are shifting to the for-sale sector, there may not be a reason for multifamily folks to pursue them,” says Shyam Kannan, vice president and director of research and development for RCLCO, a real estate advisory firm based in Bethesda, Md. “Single women below the age of 34 are becoming home buyers before marriage or child rearing.”
Consider this: Today, 11 percent to 12 percent of homes are owned by single women, and that number will grow as more women become home owners. In fact, nearly one out of every four homes (22 percent) bought in 2006 was bought by a single woman, according to the National Association of Realtors. By 2010, there will be 31 million female-headed households in the country, says Be Jane's Horton. “It's a big phenomenon,” Horton adds. “Builders have shifted to be focused on women.”
And it's little wonder. Despite the struggling U.S. economy, women are still a powerful financial force. Women are the fastest-growing segment of new business owners, and the number of women earning $100,000-plus has tripled in the past decade, according to the Employment Policy Foundation, a Washington, D.C.-based research organization. Plus, women spend $4 trillion annually, which accounts for 83 percent of all consumer spending, says Hollywood, Fla.-based WomenCertified, a women's consumer advocacy and retail training organization. By 2010, women will account for about 50 percent of the anticipated $14 trillion in private wealth in the country, according to The Power of the Purse: How Smart Businesses Are Adapting to the World's Most Important Consumer—Women by Fara Warner (Pearson/Prentice Hall, 2006). The book notes that 41 percent of the 3.3 million Americans with incomes exceeding $500,000 are women and that women control or influence 67 percent of household investment decisions.
Deborah Brett, owner of Deborah L. Brett and Associates, a real estate consulting firm based in Plainsboro, N.J., thinks that's why condo builders, in particular, have been able to capitalize on such preferences. “You will see some single women buying single-family detached, but I think it's more of a condo or townhouse thing,” she says.
Right now, however, a historically tough for-sale market may keep many women in rental housing. There's still a group of women who can't afford to buy. At the bottom of the financial spectrum, single women still suffer. More than 40 percent of unmarried women have household incomes of less than $30,000 a year, according to “Overlooked So Far: The Nation's Unmarried Women in 2008,” a report from The Center for American Progress Action Fund, a Washington, D.C.-based think tank. What's more, another report, “The Female Factor 2008: Why Women are at Greater Financial Risk in Retirement” from the Women's Institute for a Secure Retirement, a Washington, D.C.-based advocacy group, says women spend less time in the workforce and have lower lifetime earnings than men, earning 77 cents for every dollar earned by men. That translates into a median retirement income valued at just 58 percent of men's.
But long-term, Kannan thinks apartment owners may need a new script. “The challenge to the multifamily folks will be to make a compelling case to these women that they should rent,” he says. “What can be offered in terms of product and placemaking that gives them a reason to choose rental properties as opposed to for-sale?”
Kannan thinks this sort of product will need both distinct rebranding and new product design. One development that seems to be fulfilling this demand is the Spire, a 503-unit, 42-story residential apartment and condo tower in Denver developed by Denver-based Nichols Partnership.
So far, 55 percent of the traffic at the property is from single women, Kannan says. The appeal: the project's amenities and its environmental focus (Spire is one of the country's largest sustainably designed buildings). Kannan says energy efficiency matters more to women. In studies he's done, 65 percent of women indicate a preference for an energy-efficient home, versus 55 percent of men. “More women than men are attuned to energy efficiency,” he says.
Single women desire only a sense of security in housing.
While many single women desire energy efficiency, it's not their No. 1 concern, many industry observers say. “With location and within the home, safety is the No. 1 feature that they want,” Horton of Be Jane says.
This safety can take two forms. One, of course, is the neighborhood. Brooks, for instance, called the police to check the crime rate in her neighborhood before she bought. Kannan says that single women want the convenience—but not the risk—of the inner city. As a result, “they seem to be drifting toward safe urbanism,” he says. “It gives them access to all of the amenities they would have in an urban setting without having to be fearful of what could happen in a true urban [environment].”
London thinks single women tend to shy away from transitional neighborhoods more than couples or single men. “At one point, you feel like [the neighborhood you are in] is well and good—when it's a Thursday at 3:00 p.m. and the sun is shining,” Horton says. “But then you come home at 1:00 a.m. on Saturday, and you say, ‘You know, actually, I didn't feel that great about it.'”
Industry experts also say a building's proximity to public transit and parking also factors into this equation. Consider this: If a single woman often works late, a parking garage and controlled building entrance would be considered great assets. Bozzuto's Smith thinks safety features for single women should include well lit access to and routes around and between the building and garage. “I think women are looking for secure design [and] secure entry systems,” consultant Brett adds.
The second aspect to the desired sense of security is found inside the unit with adequate follow-up and maintenance. Steve Shoemaker, head of sales and marketing for Ideal Homes, a Norman, Okla.-based builder of about 400 single-family homes a year, thinks women respond well to his firm's offerings, which include two walkthroughs 60 days and 12 months after move-in. “It's not just to make sure nothing is broken but also to make sure that you're operating the home correctly,” Shoemaker says. “It's about peace of mind and security.”
Still, this desire for security may be exaggerated. Many builders and analysts believe that women much prefer socializing opportunities and luxury touches to a multi-layer security system. “They're looking for social opportunities,” Brett says. “That's one of the nice things you see in more upscale suburban rental complexes. They try to create events for the tenants.”
Others agree. “You need areas for entertaining—places to have drinks with the girls and sit out by the pool,” Smith says.
At The Gramercy at Metropolitan Park in Pentagon City, Va., Kettler offers a hotel-style spa, massage room, and fitness centers with “bells and whistles” such as manicure and pedicure stations. Smith adds that knowing what women tend to use in the gym—items such as weights and classes in fitness centers—is also important.
Taylor Morrison, a Scottsdale, Ariz.-based builder of condos and townhomes for first-time buyers, found that these same amenities also draw older single women. “The golf amenities and country club lifestyle that we originally marketed were not as effective [for] older single women,” says Arianna Barrios, marketing director for the Western region at Taylor Morrison. “They weren't ready for the retirement community.”
But developers can't dismiss in-unit touches, either. Smith of Bozzuto says women prefer clean lines, natural light, and storage space. “You can't put in a 30-inch vanity top and think that's going to be adequate for a woman with a lot of cosmetics and hair appliances,” she says.
On the exterior, both Kannan and Smith note that most building design is done by men. Kannan sees lots of glass and steel in high-rises, for instance. “In most cases, high-rises are very muscular looking structures,” he says. “It's a very male approach to design sensibilities.”
Single women still face stigmas in the leasing office.
Unfortunately, even if all the stars align with the right market, message, and product to pique the interests of single women, there are a number of misconceptions about their social and behavioral needs. For one, an undercurrent still exists that single women need help when they arrive in the leasing office. In some cases, this may manifest itself in the form of an on-site manager wondering if a woman can rent a unit on her own. So he asks if she's married before she fills out an application.
But the numbers would contradict this stereotype. “The number of women going through college is higher than men, and [the number] going through grad school is [also] higher than men,” says Christy Freeland, CEO of Riverstone Residential, a Dallas-based apartment manager with approximately 200,000 units nationwide.
There's also a perception that single women are gullible—that they can be suckered by a wily contractor. “When they think of single women, they picture the woman who takes a car for an oil change and gets duped into $1,000 worth of repairs,” Shoemaker says. “That's an unfair characterization of single women. They're smart. They've done their research. They probably know more about your floor plans than your salesperson.”
Yes, some women tend to prefer homes where they don't have to worry about maintenance and upkeep. But Shoemaker says this isn't the case, citing a recent planning meeting with female customers. At the meeting, one resident invited the other back to her place to learn how to drain a hot water tank. “She had taught herself on line,” he says.
Horton of Be Jane agrees, noting that there's an $80 billion female DIY market. Of course, women won't be doing a lot of DIY work in apartments, simply because they don't own the unit. But if a rental owner can offer some customization abilities, it may help them compete with the for-sale market. “I would push for modifications that women want,” Horton says.
BY THE NUMBERS
Single women have emerged as a powerful financial force in the U.S. economy. The numbers tell the story.
U.S. single women ages 20 to 34 (about 50% of the age group):
14.9 million
SOURCE: U.S. CENSUS BUREAU
Single women renters, all ages, who are heads of households:
6.7 million
SOURCE: U.S. CENSUS BUREAU
Women's annual spending power (83% of all consumer spending):
$4 trillion
SOURCE: WOMENCERTIFIED
Private wealth expected to be attributed to women by 2010:
$7 trillion
SOURCE:IN THE POWER OF THE PURSE(PEARSON/PRENTICE HALL, 2006)
Women, ages 25 to 29, who had a bachelor's degree or higher in 2007 (vs. 26% of men):
33%
SOURCE: U.S. CENSUS BUREAU
Women who earned $100,000 or more in 2001 (vs. 242,000 women in 1991):
861K
SOURCE: EMPLOYMENT POLICY FOUNDATION
No. of home buyers in 2006 who were single women:
22%
SOURCE: NATIONAL ASSOCIATION OF REALTORS