This Demographic is Taking the Lead in the Multifamily Amenities Market- and Here’s Why It Matters
How big of an impact do amenities play for renters where they live? It turns out, for 87.2% of renters, amenities matter. A lot.
We’re recapping several key highlights from a study published by 2nd Kitchen, an all-in-one food amenity service for multifamily properties including experiences like local restaurant and food truck pop-ups and room service.
The Multifamily Amenity Space’s Big Picture
In the last decade, multifamily units have steadily climbed and over the next ten years they are still forecasted to continue on with an additional 2 million units by demand, with no signs of stopping anytime soon. According to a recent demographic analysis from ParcelPending, a mail deliverability service at multifamily complexes across the U.S., Millennials represent 40% of the total housing market, with 90% of them being renters, the largest of all age demographics. While the Baby Boomer market is still significant in the multifamily space, Millennials have recently shifted and surpassed Baby Boomers as the largest segment of the population – and the visibility is prevalent across the multifamily market.
To further demonstrate the parallel relationship of multifamily growth projections with millennial supply, Rod Kleif of Forbes Real Estate Council and Real Estate Investor, and Host of Lifetime Cash Flow Podcast cited last March that he sees no signs of multifamily expansion slowing down, considering the shift of millennials delaying major events like childbirth and marriage, and working through debts such as student loans. Following not too far behind are Baby Boomers, who increasingly prefer walkable neighborhoods with access to an array of convenient on-site amenities and prefer to remove the burden of frequent maintenance required with home ownership.
The Cost of Turnover
According to Lori Hammond with Property Management Minutes, the cost of resident turnover in multifamily properties equates to anywhere between $1,000 – $5,000 for every single turnover. Taking the example of a fairly average community of 225 units with a 40% turnover rate (roughly 7-8 moves per month), and an average rent of $650/mo (which is still conservative to the national average), and also accounting for your average cost of $1,800 per resident turnover, this sums a total cost to the average community at $162,000/year on resident turnover – or roughly 9% of total gross rent.
The Current State of Amenities in the Multifamily Space
When asked the importance of amenities in 2nd kitchen’s survey polls, 3 out of 4 surveyed said amenities ranked a 7 or higher on a scale of 1-10.
The most common types of amenities offered in buildings are 19.5 Fitness and Wellness, 13.3% outdoor spaces and 12.2% prop-tech software. Fitness and wellness amenities include features and areas such as fitness centers, saunas/pools, tennis courts, workout classes, Yoga studios, and on-site personal training. Outdoor amenities include perks such as grilling areas, community gardens to promote green living, sustainability, while providing esthetic appeal, and poolside cabanas to relax. Prop-tech software includes services such as property management software that allow residents to easily pay rent or HOA fees online as well as submit maintenance requests, contact property managers and other community members, and stay up-to-date on the latest upcoming events and amenities in the neighborhood.
Bike storage rooms, fitness centers, patio grill and rooftop areas, as well as pools, high-speed internet, and keyless entry make up the majority of current amenities in many locations, but the potential to stand out with higher-demand categories has yet to be saturated, since there is currently more exclusivity in categories such as dog parks, package lockers, convenience stores, libraries and value added services, like Yoga classes.
The Highest Demand Amenities
Fitness and Wellness ranked the top category for highest demand to multifamily residents at 19.5%, with on-site fitness specifically being the most influential amenity noted by residents in the 2nd Kitchen survey. This was followed by 13.3% for outdoor spaces and 12.2% for food and beverage amenities such as on-demand dining, room service, smart kiosks and coffee bars, as well as catering services such as restaurant pop-ups and food trucks to boost resident engagement and allow community managers a way to easily provide additional value to tenants. Services to help them schedule, organize and curate these events are of course just as necessary with the ever-increasing load that property managers have on their plates. When it came to amenities that ranked the lowest for demand, gaming, arts and media, and childcare were the least requested categories.
More importantly, when surveyed by 2nd kitchen on the influence of amenities as part of the buying decision, 90.3% of respondents noted they would be willing to pay higher rent if it included some of these higher-demand amenities.
Additionally, Melissa Bartolucci Delgado of Cityview, a multifamily management investment and development firm based out of Los Angeles, echoed the same basis that the multifamily market is on trend to continue to keep up with the millennial demographic. She shares that creative amenities like dog parks, “instagrammable” locations, health and wellness amenities like HIIT classes and doga (dog yoga), along with coworking spaces and connectivity will continue to keep some properties at the cutting edge of competition while other property managers who opt-out may be left behind.
How Property Managers in the Multifamily Space Can Stay Competitive Starting Today
Property managers who wish to capture and retain the attention of the peak demographic can stay ahead of the curve by including the following practices into their resident and tenant retention plans:
- Focus marketing around on Millennials and Baby Boomers, and consider outlets that these demographic uses the most. For millennials, these channels would include Apartment Review sites and Instagram.
- Be sure your amenities are at the forefront of all your marketing and property tours.
- Stay ahead of amenity trends and prop-tech that you can incorporate into your property’s services or offerings and also help you easily provide value while streamlining efforts.
- You can also survey your residents to find out more of what they are looking for and enjoy the most, or other services they use that you could possibly bring on-site.