Today, millennials account for the largest number of multifamily renters, approximately 43%. However, a new generation is entering their prime renting years – Gen Z.
Today, millennials account for the largest number of multifamily renters, approximately 43%. However, a new generation is entering their prime renting years – Gen Z. People within this cohort were born between 1997 and 2012 and are currently between 9 and 24 years old. Nearly 68 million people within the U.S. fall into this category, and the oldest members are now renters.
Unlike millennials, Gen Z values technology amenities more than physical ones. They seek convenience (think mobile apps) over shiny new countertops. Multifamily real estate investors should be aware of the different desires of their renters, but they don’t have to overhaul their properties to attract tenants. A few smart tech investments will favorably position properties to Gen Z renters without negatively impacting investor returns.
Who is Gen Z?
Tech-savvy. Environmentally conscious. Socially Engaged.
People in this generation grew up with smart technology. The oldest members of Gen Z were just ten years old when the first iPhone debuted. Now, Gen Z spends an average of 4 hours and 15 minutes per day on mobile, and 95 percent own a smartphone, according to a recent report from Snapchat. As such, they expect convenient, personalized mobile experiences.
Gen Z accounts for 8% of all adult renters in small multifamily, 6% in large multifamily, and 9% in single-family rentals. As the multifamily industry goes through a multigenerational shift, Gen Z is poised to be the key market driver in the near future. Multifamily rental properties can offer convenience, cost savings, and environmental conservation to attract Gen Z renters.
Here are four practical ways multifamily property owners and operators can attract Gen Z renters and still position their properties to other generational renter cohorts.
Seamless Digital Experience
Convenience is the keyword. Gen Z desires a mobile app that gives them the convenience of rent payment and all other property maintenance-related actions. They expect electronic processes including agentless applications, lease-signing, keyless entry, and property-wide Wi-Fi. To attract this renter cohort, multifamily property owners should invest in technology infrastructure and market the investments on platforms like TikTok and Instagram.
Lean and Green
Driven by cost savings and a desire for features that improve their carbon footprint, Gen Z also expects smart tech in their rental units. Energy Star kitchen appliances, smart thermostats, LED lighting, and recycling is the next most wanted smart-home amenities for Gen Z. Owners and operators who invest in green technology initiatives and market their efforts will see strong ROIs.
An added perk of green investment is that all building stakeholders benefit from increased NOI with smarter and efficient water, energy, and waste management.
Secure Accessibility of Packages
As consumers continue to favor online shopping, the desire for efficient and secure delivery of packages will continue to rise for apartment renters, especially Gen Z. Renters in this generation are willing to pay for secure package delivery. The J Turner Research study, The Next Gen Renter: 2020 and Beyond, found that 28% of Gen Z’s are willing to pay an additional amount for small lockers, while nearly 26% are willing to pay for in-home deliveries.
Wellness is a Priority
Staying fit and healthy is a chief priority of Gen Z. Nearly 56% of this generation would like their apartment complex to have a fully equipped gym. More so than other generations, Gen Z seeks social experiences that promote wellness and foster a sense of community. They are willing to sign-up and pay for such classes as yoga and meditation.
Overall, the Gen Z cohort thrives on mobile-centric, personalized service and unique experiences. They value convenience, staying engaged in their community, and leading a socially responsible lifestyle. Multifamily investors must keep Gen Z preferences in mind as more begin to enter the rental market. However, they don’t need to overhaul their properties to attract this demographic. Strategic tech and green investments will go a long way with this upcoming renter generation – Gen Z.
Lucern Capital Partners
Lucern Capital Partners is a fully integrated real estate investment firm focused on acquiring opportunistic or mismanaged real estate investments in markets throughout the Northeast, Mid-Atlantic, and Southeast regions of the United States. Lucern’s primary focus is delivering superior risk-adjusted returns by applying a value-oriented philosophy to real estate investing. With over 55 years of collective industry experience and over $150M of transactional volume, the firm aims to identify assets that are mismanaged or underperforming and that can be improved through active asset management and a value-add business plan. Get in touch today to speak to a team member regarding our strategic investment approach.