The multifamily market is as strong as ever driven in part by this article’s current multifamily trends. While disruption is occurring in many industries, multifamily properties are seeing the benefits of it. New technologies are only helping property owners and tenants alike occupy and enjoy a place to call home. Here are seven trends that should be considered with both existing as well as new properties being designed.
Walkable and urban setting.
Most new construction activity is in or near urban centers. Renting is the only affordable way to be close to an urban center in many cities. They want everything within 20 minutes. Many properties provide access to locations that are not otherwise available; such as employment, shopping, cultural centers, entertainment, sporting events, etc. Another aspect of walkability is proximity to public transportation. The result is a greater sense of community that a couple large demographic segments are seeking.
Largest tenant segments: millennials and empty nesters.
Today’s demographics have these two large segments; millennials, and empty nesters, on the demand side of the multifamily market. So it is important to address their needs, concerns, and desires in a property. Both are looking for smaller space. These two segments are where you will find Generation Y enjoying the company of their parents as well as their friend’s parents. Combine these two segments and you have what is called a multi-generational apartment.
Tenants seeking affordable luxury: smaller units with more elaborate unit amenities.
One of the unique aspects of this current market is the desire for small luxury space that is affordable. So, to get that, developers are creating “micro” units that are 250-350 square feet and rent them for $900 a month. It works for millennials because they don’t spend a lot of time at home. It works for empty nesters to a degree because they are downsizing. The key is the location according to the new Urban Land Institute report ‘The Macro View of Micro Units.” Amenities in the units might include, high-end flooring, tall ceilings, in-home washer and dryer, marble bathrooms, stainless steel appliances in micro kitchens, private balcony or terrace, and spacious walk-in closets.
Tenants are looking for more.
While traditional cable and satellite utilities are on the decline, it’s hard not to continue offering them. However, a fast internet access is vital and becoming a larger source of highly selective media, entertainment, and sports. Another desire is to have greater control over HVAC and lighting controls by using technology to allow better control for both tenants and property owners. Having green features speaks to tenants who value energy conservation which is also an added benefit, but it’s a subject of a future report.
Package delivery management.
With greater use of the internet to purchase most anything, it becomes more important to deal with all the incoming packages ordered by tenants. Some tenants may just have their stuff delivered at work or another location. But being able to safely have packages delivered at the property provides tenants with peace of mind. So offering package lockers with emails that are sent out when parcels are delivered is a value add in many locations. Millennials, in particular, value this amenity when searching for a property. See my article on this here.
Get ready for this list of amenities.
Most amenities involve some sort of common area, and most of these also involve some sort of social aspect or have a common area for working. Multifamily tenants today are looking for common space that can act as an ad hoc living space with both indoor and outdoor living. Many amenities involve a service. Millennials and surprisingly enough empty nesters both are devoted to pets and their mobile devices. So technology is another aspect of this. These are some of the amenities being found in new properties: car-sharing service, bike storage and repair, child-care service, concierge service, cooking classes, dry cleaning/laundry service, Free WiFi, pet grooming, personal shopper, rock-climbing wall, rooftop terrace, spa/massage center, tech/business center, extra storage space, and yoga/aerobics/wellness classes. Notice all the “service” amenities?
When thinking about these current multifamily trends, it is hard not to think of Airbnb! There might be some high-profit margin units with a strategy like this. The key will be a location to local attractions to draw these short-term tenants in. A large consideration for these tenants is that the unit needs to be furnished. One of the drawbacks to this is the sense of community, mentioned above, would be lost. In thinking about these short-term leases, it might be good to keep the number of these units to a minimum or you will upset the longer staying resident tenants. Finally, there has been some discussion of allowing tenants to sub-lease out their longer-term lease in this fashion, but this is a legal topic worthy of its own report.
Hopefully, you can find ways to capitalize on these current multifamily trends and add value your property and greater satisfaction for your tenants. Let us know if you are seeing other trends that are happening in your area.