As the country's largest generation, millennials currently dominate the rental market. But the cohort behind them will soon begin to make up a significant portion of those looking for an apartment.
The oldest of Gen Z, those born typically in the mid-1990s to mid-2000s, has just graduated college and is on the hunt for their first place, presenting an opportunity for developers to get ahead of the curve by designing for these renters now.
"[Gen Z] represents a smaller portion of the rental housing market today, but a really fast growing one," says Nat Kunes, vice president of product at property management software company, AppFolio. "Every year that goes by, more of this generation is moving out and into the rental market, so preparing for that future generation of renters now will help you stay ahead and help you offer properties that are attractive to these residents."
When designing and building today, you need to keep the renters of tomorrow in mind. Here, Kunes spoke with MFE about what this generation is looking for in a property.
MFE: Who is Gen Z?
Kunes: Generational lines are always a bit loose, but the oldest of them right now are about 22. Most of them are still in college or have just graduated, or if they didn't attend college they are moving out of their parent's home.
While close in age, they are a bit different than the millennial generation in terms of what defines them. Millennials tended to span the digital divide, meaning they started getting digital devices in upper elementary school or middle school, and so they had a lot more time with technology than previous generations. But Gen Z has been digital since they were born, so it's ingrained in their mindset. Their behaviors and expectations are dramatically different in terms of how they use technology, even to communicate basic things, and that manifests itself in the rental market.
MFE: How so? What is this generation looking for in an apartment?
Kunes: They're looking for a sense of community and an experience, so the branding of an apartment community is likely to attract them. For property managers, that means branding through some sort of amenity programming, like pool parties or movies, that builds a lifestyle and community connection.
They are also motivated by personalization. Knowing a bit about each resident before they come in will help you tailor offerings to their liking and offer them customized concessions. In the past, it was common for a leasing office to offer a set amount off rent or a month free for signing. Now, property managers are creating personalized offers, like free memberships at nearby fitness studios if they are in to exercise, or free dog walking services for those with pets, for example. The net dollar spend by the property manager is about the same or maybe even less than what they were spending on those old concessions, but it makes Gen Z feel so much more attached to the community.
MFE: What specific amenities and features are they looking for?
Kunes: Smart technology is one of the biggest drivers for this group of renters. A lot of property managers now are including Amazon Alexa devices in units, and through Alexa they can pay rent or file maintenance requests. It's been really popular primarily because it also offers them an outlet or a tool to communicate with the property manager for maintenance issues easily. That's a big win for Gen Z because they have a need for instant communication. They want to be able to text questions or chat with someone, and they don’t want to have to pick up the phone or go to the office, so Alexa can help with some of those needs.
MFE: How has their experience in student housing influenced what they're looking for in their next home?
Kunes: Over the last two decades, student housing has gotten much nicer and is often mixed-use, so they have instant access to coffee shops, restaurants, gyms, or study spots. It's a lifestyle they've become accustomed to, and so they will be looking for places to live that offer similar benefits when they come out into the market. Student housing has conditioned them to want a place where they can easily see their neighbors and hang out in a community common area.
MFE: Why should developers be paying attention to Gen Z now?
Kunes: They are going to be a huge portion of the rental population over the coming years. Making some of these investments now, whether its in smart technology or just changing how you do your amenity programs, will ultimately make you more successful in the future. Now is the time to start laying that ground work.
