Renting is trending. More U.S. households are renters today than at any point since at least 1965, according to the Pew Research Center. A third of today’s renters say renting is a matter of choice – they could buy a home, but they choose to rent instead, according to a Pew Research Center survey. Most renters cite financial reasons for why they rent rather than own their home, but there are other factors as well. 31% cite flexibility of renting as a major reason they rent, while 26% say not wanting to be responsible for maintenance and repairs is a major driver. In addition, factors including increased mortgage rates and median home prices perpetuate the cycle for renting. To help battle inflation, the Federal Reserve recently raised recently raised interest rates for an average 30-year fixed rate mortgage at 5.5%, compared to around 3% around the same time last year. Meanwhile, the average cost of home ownership in the U.S. staggers just above $500,000 last quarter, compared to about $380,000 in the first quarter of 2020.
Rental housing owners and managers continue to evolve the resident experience to meet the needs of a growing population of renters by choice. As apartment renting itself is forecasted to remain strong into 2023, here are the top five trends for multifamily real estate technology and service we should expect to see into 2023 and beyond.
1. Renters Expecting Convenience Online ordering, package deliveries, and deliveries of perishables such as groceries and meals to apartment community residents have skyrocketed since 2020. That trend shows no sign of slowing down. Rental housing communities are adapting to accommodate this changing consumer behavior. Solutions such as on-site lockers or package rooms and package delivery services have become must-have amenities. Multifamily operators are also collaborating with retailers to bring same-day delivery to their residents, in some cases as a perk of residency. For example, NMHC Top 10 developer Continental Properties offers a nationwide partnership with Shipt, providing unlimited free same-day delivery of fresh foods, household, and office essentials to their residents. Expect more rental housing communities to offer similar partnerships in the future.
Renters’ interest in smart home technology is also tied to its ability to add convenience, according to the 2022 Renter Preferences Survey Report published by NMHC and Grace Hill. Survey results show that 70% of respondents say they were interested in or would not rent without a smart thermostat and more than 2/3 of respondents are interested in water-saving systems and smart leak detection. These smart technologies make sense for renters with a stated preference for avoiding the hassles of maintenance and repairs.
2. A New, Bigger Wave of Flexibility
45% of renters surveyed by the NMHC and Grace Hill say they work from home some or all of the time. This shift in worker habits is likely to continue and is driving demand for apartment communities to accommodate renters with work-friendly arrangements both in the home and common areas. Flexibility is key in floor plans, furnishings, meeting, and co-working spaces. Look for communities to decorate their model homes in new, creative ways, showcasing how residents can adapt the space to their work-from-home needs. Expect changes in common area spaces to satisfy remote workers, such as dedicated “Zoom Rooms,” private, quiet spaces where residents can take virtual meetings.
According to the NMHC/Grace Hill report, renters’ desires for flexibility isn’t limited to just physical space. “As remote work gives more renters the freedom to move about, they are considering alternatives to the traditional leasing model,” according to the 2022 Renter Preferences Study. For rental housing owners and managers, accommodating residents’ wishes for added flexibility can mean getting creative with lease terms, adopting housing membership programs across their multifamily portfolios similar to vacation clubs, and allowing residents the ability to list their apartments on short-term rental sites like Airbnb.
3. Health & Wellness Services at Their Finest
Renters remain enamored with community fitness centers for satisfying their personal health and exercise goals. Increasingly, they are also hungry for amenities that do more towards supporting health, wellness, and sustainability. Canadian developer and manager of multifamily properties Fitzrovia offers amenities that kick it up a notch. Their Toronto community, The Waverly, provides a rooftop beehive, plant-based, cold-pressed juices and kombucha in their fitness center; and access to virtual healthcare with Cleveland Clinic Canada.
In properties such as The Pearl of Silver Spring MD, residents enjoy an onsite 5,000 square foot farm with organic grown vegetables, a community kitchen to prepare fresh home-cooked dinners, and weekend demonstrations from local chefs. Meanwhile, science-backed organizations offer developers the ability to measure the health and wellness levels of their communities by certifying them for the WELL Building Standard and Fitwel certifications, each with separate criteria to promote and cultivate the best outcome for resident's physical, mental, and social well-being. Communities such as Avalon Bay adapt a similar mindset by providing complimentary group fitness classes to their Class A apartment properties for greater renter accessibility to a healthy lifestyle. We anticipate other U.S. owners and operators will follow suite and continue to step up their offerings with similar high-end amenities and services.
4. Sustainability: The New Normal
Today’s renter is notably more environmentally conscious than in years past. They favor energy efficiency in appliances and building features. In the 2022 Renter Preferences Study, 71% report interest in enhanced indoor air quality and 65% say healthy building certifications would positively influence their leasing decisions. There is also increased enthusiasm for sustainable initiatives such as community gardens, recycling, and shared use of everything from scooters to surfboards to musical instruments—the so-called “sharing economy.” According to Forbes, for today’s consumer, “a less-is-more, collaborative standpoint has gained ground and is leaving (product) ownership behind.” All of these trends are alive and well among the renter population and will continue to shape the future rental community living experience.
5. Wider Artificial Intelligence Adoption
At the National Apartment Association’s 2022 Apartmentalize education conference, many education sessions touched on the rise of artificial intelligence in multifamily management, particularly in terms of streamlining the leasing process. According to Scott Wesson, Chief Digital Officer of UDR, AI-powered virtual leasing assistants can answer 85% of prospects’ most basic questions, which has allowed UDR to rewrite job descriptions for leasing associates to enable them to specialize instead in resident-related roles and functions. At multifamily technology provider RealPage’s annual conference, RealWorld 2022, AI was celebrated for bringing efficiency to another aspect of multifamily management: cost control related to trash pickup. Said industry thought leader Paul Bergeron, “Communities path for pick-ups when (a trash) container is on average 43% full. That’s a waste of money. (An AI-powered) camera inside the dumpster helps control costs.”
In 2023 and beyond, we anticipate an even wider adoption of artificial intelligence in multifamily rental housing management to improve efficiencies and enhance the resident living experience in a variety of ways. The robots are coming—to make our lives easier, more productive, and more efficient.
The trends mentioned above will likely lead to a more unified resident experience, streamlined property management, and greater prioritization of health and wellness incorporation within multifamily development into 2023. As single-family home ownership remains less attainable and forward-thinking developers carry forth modern amenities with renters in mind, multifamily properties are increasingly popular with renters by choice. Renters are no longer utilizing their living space as a roof over their head, but now more than ever, working and spending more time than ever at home, inspiring the need for apartment communities to be built with a 360-degree lifestyle experience. We see great promise and innovation in future resident living experiences, and we are excited to see what the future has to offer.
What trends do you see on the horizon for rental housing providers? Tell us in the comments. We love to hear your thoughts and experiences.
This post was originally shared from Livly's Co-Founder & Co-CEO Brian Duggan on Multifamily Insiders. You can preview the original story here.
Sources:
More U.S. households are renting than at any point in 50 years, Pew Research Center, https://www.pewresearch.org/fact-tank/2017/07/19/more-u-s-households-are-renting-than-at-any-point-in-50-years/
3 reasons it's getting harder for renters to buy, Axios, https://www.axios.com/2022/07/15/housing-market-home-prices-mortgage-rates
In a Recovering Market, Homeownership Rates Are Down Sharply for Blacks, Young Adults, Pew Research Center, https://www.pewresearch.org/social-trends/2016/12/15/in-a-recovering-market-homeownership-rates-are-down-sharply-for-blacks-young-adults/#most-renters-would-like-to-buy-a-home-in-the-future-but-many-cite-finances-among-major-reasons-for-currently-renting
Wellness Focused Communities Take Resident Health to Next Level, Multifamily Executive, https://www.multifamilyexecutive.com/design-development/design/wellness-focused-communities-take-resident-health-to-next-level_o
Continental Properties, Shipt Announce Same-Day Delivery Partnership, Shipt, https://corporate.shipt.com/news/continental-properties,-shipt-announce-same-day-delivery-partnership
2022 Renter Preferences Survey Report, NMHC, https://www.nmhc.org/residents
Apartment Residents’ Preferences Driven by Remote Work, Grace Hill, https://gracehill.com/blog/remote-work-driving-resident-preferences/
The Sharing Economy Is Still Growing, And Business Should Take Note, Forbes, https://www.forbes.com/sites/forbeslacouncil/2019/03/04/the-sharing-economy-is-still-growing-and-businesses-should-take-note/?sh=3e5ac2e54c33
Paul Bergeron on LinkedIn, https://www.linkedin.com/posts/paul-bergeron-6762b26_thoughtleadershiptoday-activity-6955218243644968960-kiF_?utm_source=linkedin_share&utm_medium=member_desktop_web