By Diane Sears
Shifts in Florida’s demographics are leading to big changes in the multifamily housing market, and proactive communities can take advantage of trends that are just now starting to surface. A look inside recent research shows what the renters of today and tomorrow are thinking. Some of this information might be surprising for property managers who have been in the industry a long time.
Apartment communities that traditionally have catered to younger renters who are saving money to buy homes will see an influx of a whole different group of residents. One school of thought goes beyond a generational analysis and examines the needs of renters according to the decade of their birth. For instance, those born in the 1960s are increasingly turning to renting rather than homeownership, and the amenities they expect are different from what renters born in the 1990s require.
“We’ll see an estimated 2.9 million new renters over the next 10 years,” said Lesley Deutch, a principal based in Florida with John Burns Real Estate Consulting, which is based in California and has offices nationwide. “That’s really good, but they’re not all young people. More than half will be over age 55.
“Because the demographics are changing so much over the next decade or two,” she said, “you have to look at not only how many renters there will be, but who they are.”
To stay competitive, apartment communities are updating their offerings to attract different groups of residents. Those that want to continue leasing to younger residents are adding café, retail, and co-work space along with 24-hour coffee stations to their welcome centers. Properties trying to sign those who are 55-plus are installing pickleball courts, offering larger apartments that will hold more furniture, and assigning a staff member to plan wine-tastings and other activities that gather residents.
These were some of the ideas people were buzzing about during a gathering of builders, land planners, and real estate professionals in May at the annual Urban Land Institute Florida Summit in Tampa. One of the presenters was John Burns, CEO and founder of the consulting firm and the co-author with Chris Porter of a book published in October 2016 titled Big Shifts Ahead: Demographic Clarity for Businesses.
WHO’S RENTING: THE TRENDS
Why is a knowledge of traits by decade important? Because each group sets its own trends in how people choose to live, work, and play.
Nationwide, there will be 7.2 million more renters by 2025 than there are today, figures show. The rate of homeowners is growing more slowly, with homeowners expected to grow by 5.3 million during the same time period.
Almost 12 percent of America rents single-family homes, many from property managers who are hired by the owners, research shows. The other renters are in multifamily homes including apartments and condominiums.
Renting among older Americans has surged. All of the age groups from 55 to 70 have increased, but here’s how the numbers shake out, according to the U.S. Census Bureau’s Current Population Survey/Housing Vacancy Survey and John Burns Real Estate Consulting, LLC:
A boom in the number of people 55 and older will continue to create new housing demand. The population of retirees will increase from 48 million in 2014 to 66 million in 2024, according to John Burns Real Estate Consulting calculations of U.S. Census Bureau Population Estimates and 2014 National Projections.
In looking at a trend of who owned homes at their 10-year high school reunion, the 1970s Balancers were at 37 percent, rivaling the all-time high set by the 1950s Innovators. The Equalers, meanwhile, those born in the 1960s, were at 34 percent homeownership. Because the Balancers started in homeownership at a young age, it was especially crushing for them to lose their homes to the banks during the recession and has added to the apartment boom.
The Sharers group, those born in the 1980s, has “lived urban,” Burns said, although that trend is changing as people start families.
What is urban? Burns says it’s defined as any city that has professional sports. All but four of the pro teams in the U.S. are in urban cities. (Green Bay plus the “big suburban cities” of Anaheim, Newark, and Salt Lake are the exceptions.)
About 15.1 percent of Americans live in urban areas, defined to be 50 of the 54 largest U.S. cities. Of those, 8.1 percent are in an urban downtown, defined as having high-density housing, good walkability, great public transportation, and a majority of homes that are at least 70 years old. About 7 percent are in an urban neighborhood, which is described as the rest of the city limits surrounding the downtown area.
About 64 percent of Americans live suburban, mostly in small suburban cities. But urban demand has surged as population growth has been young adults (4.7 million in 2014) and empty nesters (10.3 million).
CHANGING NEEDS IN HOUSING
There is a growing difference in the number of retirees who are continuing to work, which affects where and how they want to live. Innovators, those born in the 1950s, are 6.6 percent more likely than the Achievers born in the 1940s to be working into their early 60s.
Figures from the U.S. Bureau of Labor Statistics show these trends of continuing to work between ages 60 and 64:
Burns calculates about 24.6 percent of Innovators will work even into their late 60s, from 65 to 69.
There are also differences in the way people are forming families. Today having a child before marriage, and then planning the wedding ceremony at a time that meets the bride’s and groom’s schedules, is more common than marriage before child, Burns says.
Property managers have to look at the needs of the residents they’re already housing as well as those they’re trying to reach, Deutch said. Younger people don’t mind living in studio apartments as long as the communal space in their buildings has open places where they can talk, have coffee, and work all at the same time. Some apartment communities have told her they have a large line item on their budgets for a fancy Starbucks machine that allows them to offer free coffee.
An area that attracts older renters should include more planned activities, Deutch said. These residents want the feel of a resort environment, which might include events at night, wine tastings, and an activities planner. She has seen some communities transform themselves to put additional shaded areas by the pool or turn a rooftop parking lot into a grass strip for a dog run.
"The 55-plus renters, that might not be as important to them,” she said. “They’re interested in health and wellness. They need room for their pets, because their kids are gone and they can devote time to dogs and cats now. They’re looking for larger units — they don’t want to live in a studio apartment because they have a lot of stuff, and they need somewhere to put it. They want to have kids come stay with them in a guest room.”
How do you market to these various demographics? Every time you consider a new marketing plan, look at how it will affect each of the 10-year groups, Burns says.
If you’re trying to increase the occupancy of your existing apartment community, take a look at who your renters are today. What are their preferences? Then look at what attracts renters to your location, such as proximity to area colleges or employment hubs.
Some communities have different types of common space to appeal to multiple age groups, she said. The community center might include a comfortable family room where people can hang out and watch videos, and then a formal dining room people can rent for family parties.
“It’s pretty impressive how the apartment world has changed,” she said. “It’s a new way of looking at things. …These are not major changes needed. It’s just altering what you’re used to.”