Multifamily housing is facing significant disruption. Forward-thinking operators share their experiences and predictions for the future
Renter preferences have shifted in the past few years, and more change is on the horizon.
“It’s a turbulent time with everything seeming to be in a state of flux,” Helen Garrahy, Senior VP of Portfolio Management with Heitman said in a presentation on June 22, 2022 at the National Apartment Association’s Apartmentalize 2022 education conference in San Diego, California.
Cost-Conscious and Eco-Conscious Given rising inflation, uncertain global markets, rising interest rates, and persistent global conflicts, Garrahy pointed out that there’s massive uncertainty and “Residents are under financial pressure every which way. They’re going to start looking for a lot more value for their (rent) money.” Rental housing operators must help residents feel as if they are saving money through the services and amenities they provide and work harder to demonstrate value for rising rental rates, she says. Mark Zikra, Head of Innovation at August Hill, agreed: “I think it’s a really important point that renters are going to start looking for more value in what they are getting for every dollar in rent.”
Zikra pointed out that today’s renters are attracted to cost-saving apartment features such as energy efficiency, which can be achieved through efficient HVAC systems and appliances and with smart home technology such as smart thermostats. It’s not just the cost-saving that appeals to residents. “Residents are very smart and interested in sustainability. They’re looking at companies being environmentally conscious. Being upfront about that stuff and showing that you’re doing it is important.”
Accelerated Adoption of New Technology
Many rental housing operators were forced to update their processes and systems as a result of the COVID-19 pandemic. Dana Hill, Senior Director of Engagement at RangeWater Real Estate, said “It’s caused us to …embrace the technology that initially before COVID, we didn’t want to touch. Often, we were thinking, ‘Well how does this really fit? How does it integrate with what we do, and is it something that all of our teams are going to be able to adapt if we make the investment?” Out of necessity, operators implemented new technologies in leasing and resident services over the past two years—and have maintained these innovations even as property management operations have normalized.
When asked how COVID has impacted technology in real estate, Zikra responded, “It hasn’t changed technology. It’s changed the adoption of it.”
High-Tech and the Resident Experience
For RangeWater, “It’s truly people first in our minds with all solutions and technology,” said Hill. “We want to have the ability for our residents to actually have engagement opportunities with us.” While embracing tech-forward solutions, the company is always mindful of maintaining a high-touch relationship with residents. “What we will never give up on, is that sense of personalization and engagement in-person. It is critical for us to look at the opportunity to augment technology so that we are enhancing the resident experience,” she emphasized.
Said Zikra, “It’s pertinent to think about how technology has, over time, somewhat separated us as a society, and sort of made it feel less of a community. I think we’re kind of shifting back towards wanting a community feel again.” A challenge for rental housing leaders, he mused, is “How do we bring new technology into the community without disrupting and also bringing people closer together?”
Asset Types, Demographic Differences
When asked about the impact of generational differences on renter preferences, the panelists widely agreed that such differences were not as significant as many may believe them to be. Said Hill, “We’re serving several generations…all living in the same space. They definitely want different things, but there are places where they want the same thing, such as, plenty of social spaces.” Hill pointed out that while millennials may use a media room to gather with their friends or game, Gen X or Boomer residents appreciate that same space but are more likely to use it to watch a movie.
Zikra advocated for using demographic data to identify and react to renter preferences in order to delight residents. “How can you deliver tailored experiences based on the data you are collecting so that no one person has the same living experience, but they’re all fantastic?” he challenged.
Heitman’s Garrahy remarked, “There is much wider differentiation in resident preferences than generational differences.” According to Garrahy, renter preferences and service needs in a major metropolitan area can differ quite a bit from those in the suburbs and smaller towns and are constantly shifting, partly as a result of the recent wide scale movement of residents across the country.” Zikra agreed with the notion of shift: “There’s a transition over time that’s going to take place with the student housing renter of today shifting into multifamily and the multifamily renter shifting into senior living. That’s going to mean that your different sectors of the industry are going to demand different technology because of what people are used to. We have this transition of tech throughout the different verticals throughout multifamily. I’m super interested to see how that plays out over the next five to ten years.”
Alex Samoylovich, Founder and Co-CEO of Livly and the session’s moderator, added: “I think a question a lot of people have (when they evaluate technology) is they think, ‘Oh, this technology will only make sense for Class A, or this is only for garden style,’ but really, what I think people miss the boat on is that the masses have certain wants and needs across all demographics. They have very similar needs. And when you find the right technology, it should be agnostic across all your renter demographics.”
The panelists offered their vision for the rental experience of the future. Said Zikra, “Something that you constantly see on the top of the list that residents want is safety and security.” He predicted that renter demand for access control strategy including advances in video security, camera systems, and controlled access systems will continue to escalate. Samoylovich concurred: “I do believe that access control and smart access are going to be one of the important aspects of the future of multifamily.”
Hill says that for RangeWater’s residents, it’s all about convenience. The company favors tech solutions that make residents’ live easier and simpler, such as streamlining the leasing and move-in process via automation. Hill is also intrigued about the possibility of adding small stores to communities to offer sundries and save residents from having to leave the property in search of essentials: “This is a hot new amenity that we are starting to see that would appeal to residents.”
The rising sharing economy presents amenity opportunities, according to Zikra. “I like the idea of offering rental programs whether it’s furniture, transportation like scooters or cars…VR games that residents can use by the hour or the day…that is a massive market you can expand in a lot of different areas.” And don’t overlook the popularity of electric cars, adds Zikra. “If you’re building and you’re not outfitting your parking garages for e-vehicles, do it now. Get ready. It’s going to take over.”
Garrahy had a more pragmatic take on trending tech: “We want something that just works. My favorite thing is not necessarily the newest and shiniest but rather the one that functions reliably and consistently.”
Innovation Requires Resources
Zikra offered a valuable bit of advice in closing: “Having an innovation team is important. It’s necessary if you want to look towards the future and give (residents) the best experiences they could have.” While the other panelists nodded in agreement, he continued, “Vetting new companies is a full-time job. It’s not an easy process. It needs to be taken seriously. It’s not a side job for an asset manager.”
Key Takeaways for Rental Housing Leaders
Train leasing and management team members to demonstrate the value of renting at your community. Showcase how your amenities, services, and technology help them save money.
When evaluating property tech solutions, put people first in your decision-making. Consider how adoption will impact both team members and customers.
Emphasize community-building in your resident experiences. Customers have been cooped up and closed off for too long; many are eager for interaction.
Don’t limit options based on ideas about renter preferences; instead, rely on data to inform your decision-making.
Convenience is key for all renter demographics and for employees. Look to tech to make life easier and less stressful both for your residents and your operations team.
Set reasonable expectations for evaluating, vetting, and implementing new technologies.