Often referred to as “Generation Y” or the “Millennial Generation,” a growing number of the United States’ 80 million young adults are entering the apartment rental market. Industry experts say apartment owners are now focusing on the priorities of younger renters as a result.
Ryan Severino, senior economist with Reis Inc., says the new generation of renters is interested in apartment buildings that include features such as common areas, meeting spaces, coffee bars and mini-theaters.
“As landlords are trying to reposition their properties and spend a little bit of capital expenditure, they’ve been trying to make the common areas a little more inviting to that generation,” says Severino, adding that prior generations were more concerned about the size of their actual apartment units.
Apartments catering to younger tenants are taking a hotel-style approach to community layouts and lounges, according to Jim Lapides, the National Multi Housing Council’s (NMHC) director of public relations. He says residents are also looking for programming in those common areas, such as yoga and Pilates classes held in workout rooms. Outdoor common areas such as fireplaces and fire pits are also gaining popularity.
Avalon Bay (NYSE: AVB) has created a new brand, Ava, for some of its communities specifically targeting Generation Y. The Ava brand properties feature smaller apartment units, but have more bedrooms in each unit to accommodate roommates. Lapides explains that by creating smaller units, apartments can cater to younger professionals who want to be in certain locations at a reduced price point.
One of those ‘Ava’ brand apartment buildings is currently in development in San Francisco next to the headquarters of social media company Twitter. The 55 Ninth Street apartments in San Francisco will include “urban garages” that residents can reserve when they need a place for activities such as painting and practicing an instrument. Additionally, the lobby will have communal tables where leasing agents will produce leases on iPads.
Connected with the Neighborhood
Many newer projects are being developed or refurbished in urban areas close to restaurants, nightlife and shopping.
“The renewed interested in urban living has made apartments uniquely positioned to capture this market,” Lapides says. “Location matters as much as ever. They want to be close to work, entertainment and transportation.”
Mark Tennison, Equity Residential’s (NYSE: EQR) executive vice president of development, says he’s noticed a definite shift in renters toward a more urban, upscale, mixed-use product and away from the suburban communities.
“They want their building to be part of the neighborhood,” he says.
With urban conveniences, younger apartment dwellers tend to enjoy a more pedestrian-friendly environment and are less dependent on cars to get from one place to another.
“Gen Y is much less car-centric in their needs, instead caring for a walkable lifestyle,” Lapides says.
Meeting the needs of a technologically savvy generation has also become a priority among apartment owners. If a building isn’t connected to the Internet or doesn’t’ offer good cellular service, the property owner is “behind the game,” according to Lapides.
“Communities are setting up their own internal networks that allow for digital lease renewal, online reservation of common areas and even community-specific social networks for connecting with other residents on anything from carpooling to selling furniture,” he says.
Overall, apartment sector executives seem to concur that younger residents have become savvier consumers than they were in the past and that they have higher expectations.
“The challenge is keeping abreast of the new trends and not falling behind while separating what will endure from what is a fad and continually adapting to resident life changes,” Tennison says.