The long-term outlook for the U.S. multifamily market is strong, according to CBRE Economic Advisors’ recent forecast, with a predicted demand for an additional two million units over the next decade.[i] One of the key indicators driving this demand is the millennial generation. Based on data from the U.S. Census, millennials have surpassed baby boomers as the nation’s largest adult generation. There are now 72.1 million millennials, which is defined as anyone born between 1981 and 1996 (ages 24 to 39 in 2020). [ii]
According to results from a national survey conducted by Allegion, a global home security company, 72 percent of millennials live in apartment buildings, and 75 percent plan to stay six months or longer.[iii] With three-quarters of the millennial population living in apartments, multifamily property owners and managers who understand this cohort and how best to retain them as residents will be well-positioned for success.
Millennials prefer the suburbs
Demand Institute’s survey of more than 1,000 millennial households revealed that over a five-year period, they spent $600 billion on rent, more on a per-household basis than any other generation.[iv] In that same survey, millennials reported that when they do move to their next apartment, it’s because they’re looking for more space. And where they are finding that space is the suburbs, which runs counter to millennials’ reputation as the quintessential urban dweller.
Nearly half of the millennials surveyed wanted a suburban location for their next rental, with all the attendant benefits: more space and safer streets. Communities that can offer the convenience and walkability of urban living coupled with the larger units will thrive in the next decade. According to research by the Pew Research Center, more than half of millennials are not married, and those who are got married later in life. Women millennials are also less likely than previous generations to have given birth at this stage in their life. Three in ten millennials live with a spouse and child compared to 40 percent of GenXers (individuals born between 1965 and 1980) at a comparable age.[v] So while they are delaying marriage and families, millennials still plan to be married or have kids in the next five years.[vi] This subgroup of “maturing” millennials are often “auditioning” the suburbs before raising a family. This cohort, in particular, expects amenity-rich communities but at more affordable rents.[vii]
Luxury apartment living
The National Multifamily Housing Council reports that in addition to the larger, more affordable space of a suburban development, millennials also want top notch-amenities. Millennials rank the following as the most desirable amenities: fitness centers, kitchen islands, a resident portal, outdoor recreation facilities, and community Wi-Fi.[viii] Beyond those amenities, there’s interest in security and concierge services, in-unit laundry, and conveniences such as dog parks, electric car charging stations, and recycling services. [ix]
Smart apartment features are high on their list as well. With 57 percent of millennials using delivery services, and 63 receiving one or two packages per week, upgraded package centers are a must for multifamily communities. [x] Automated package locker systems are gaining popularity because they help mitigate package clutter and increase security for resident delivery. Ideally, millennials want an automated locker system that’s centrally located, easy to retrieve and with anytime access. According to data from Package Concierge, 83 percent of residents would prefer 24/7 access to their lockers.[xi]
What does this mean for the multifamily investor?
The forecast demand for two million additional units over the next decade, creates a dynamic investment environment for the multifamily sector and new opportunities for investors, buyers, and developers. As the largest living generation, millennials know what they want, and the multifamily housing market is responding. Millennials are motivating multifamily operators to provide the amenities, technology, and service that they demand.
Retaining a property management firm with a keen understanding of marketing and leasing to the millennial generation is essential for investors and buyers who want to capitalize on this growing market. Lloyd Jones Multifamily Management, a division of Lloyd Jones LLC, has 5,500 multifamily units under management in key markets through Florida, Texas, and the Southeast. To learn more about our services, visit https://www.lloydjonesllc.com/.