How Millennials are Influencing the Multifamily Housing Market
Millennials are moving out of their parents’ houses in favor of multifamily communities. A strong economy is one factor, and Millennials are renting more than buying. This bodes well for multifamily operators who are seeing an influx of tenants to major municipalities, as well as smaller cities and suburbs. Let’s take a closer look at how Millennials are influencing the multifamily housing market.
Secondary Market Boom
“Maturing Millennials” or those around age 34 are having babies at a higher rate compared to the rest of their generation. As we’ve previously written, they are influencing the urbanization of the suburbs movement by seeking more space in markets they can afford in so-called second tier municipalities. As Building Design + Construction reports, “…while Millennials are moving out of their parents’ houses and into multifamily developments, the developments that they want are in secondary and suburban communities where they can afford larger, more affordable space. This means they’ll be looking for mixed-use suburban locations with a bit of urbanism, as well as transit-oriented developments so they can get to work in urban commercial centers.”
Specific AmenitiesFor those Millennials who aren’t ready to start a family, unit space goes by the wayside in exchange for top-notch amenities, especially in market rate multifamily properties. As we’ve previously covered, and according to the National Multifamily Housing Council, Millennials rank the following as the most desirable amenities: rooftop decks, outdoor kitchens, fitness centers, bike stations, yoga studios, and updated package centers.
Millennials also don’t overlook lobbies. “An active, inviting lobby is always important, as it is the first impression that the renter and his/her guests see upon entrance,” says Building Design + Construction. “The lobby should be open and situated like a lounge, evoking the feeling of an extended hangout space.”
Luxuries on a Budget
In lieu of buying a home and paying a mortgage, Millennial renters prefer to allocate those funds toward higher-end apartments offering luxuries that a starter home would not. In addition to the above amenities, these luxuries include security and concierge services, in-unit laundry and dishwashers, and conveniences such as smart controls for HVAC systems, dog parks, pet washing stations, recycling services and electric car charging stations.
Home Sharing Income
The total student loan debt in 2018 was $1.6 trillion, which has made it difficult for recent college graduates to save. With rents increasing in larger cities, Millennials are seeking side-hustle income property opportunities. Traditionally, this has been conducted by property owners, but Airbnb and certain landlords have recognized an opportunity and market for home-sharing for tenants. Niido Powered by Airbnb launched in 2018 and features rentals in Orlando and Nashville. “Rent your couch, a room, or your entire apartment to offset your rent or pay for your next trip,” according to the company website. “By using your apartment to generate extra income, we enable residents to spend their time and money the way they want, while at the same time supporting a global community of travelers and adventure seekers.”
Conclusion As the largest living generation, Millennials know what they want, and the multifamily housing market is responding. Whether they land in the big cities or surrounding suburbs, Millennials are motivating multifamily operators to provide access, amenities, income opportunities, and modernization.