A New Demographic
- May 23, 2012
As multifamily continues to make tremendous strides across the country, property managers are looking for ways to maintain the favorable trends in growth in occupancy. One of the most important investments an apartment community can make is attracting the next generation of renters, and such a feat has many components. From up-to-date and responsive service to convenient, contemporary amenities, owners and managers are pulling out the stops to appeal to Generation Y—or the “Millennials.”
It should come as no surprise that the submarket most familiar with the next herd of renters is that of college apartments, and players in this field have plenty of advice to offer conventional multifamily. Miles Orth, executive vice president and chief operating officer at Campus Apartments, points out one of the central characteristics of today’s young renters.
“This generation has a high degree of sensitivity to a high level of service,” Orth says. “If they feel they are not being serviced by everybody, from the office team to the facilities team, they’re very sensitive to that, and it becomes a big problem. So for conventional multifamily properties that are going to be leasing with these people, they want to make sure they’re adjusting their systems to be able to do that.”
Orth adds that one way his company caters to the need for exceptional service is by providing amenities like Internet and cable directly as this eliminates complications that might hassle the students.
“We don’t want to push that off onto somebody else because the reality is—if Time Warner has a problem with cable or Internet at 11 o’clock at night, they’re not going to deal with it until the next day. But if it’s mid-terms or if it’s finals and [the students] are submitting homework—and the system goes down—they’re not going to renew with you because, regardless of if it’s a third-party operator or not, they’re going to blame the landlord.”
As might be intuited, one of the defining features of Generation Y is their heavy reliance upon and utilization of the Internet and related amenities. Growing up in the Information Age has instilled an expectation of ease and convenience for most types of transactions, and housing is no exception.
“Everything they do is online,” Orth emphasizes. “They pay rent online, they do service requests for facilities online—they don’t really want to come down to the office and sit down in front of an office team member and talk about what’s problematic in their unit.”
Joseph Batdorf, president of Houston-based J. Turner Research, remarks that Gen Y’s high level of exposure to the Internet and particularly social media has made them a far more knowledgeable demographic, and this creates an impetus for property managers to be more equipped for transactions.
“They’re much more informed and are asking more specific questions,” says Batdorf. “They’re more informed when they go out to the property about what the amenities are, what the pricing is and what the rent is. They definitely know what other residents are saying about the property.”
Brent Stephens, director of advertising and corporate communications at Ross Management Services, echoes the point that Generation Y is more reliant on feedback from friends and acquaintances and says this is already having an impact on the multifamily industry.
“Gen Y cannot be reached through traditional marketing channels,” says Stephens. “Word of mouth marketing is extremely powerful with Gen Y. We must recognize the impact of their friends on their buying decisions. They grew up with a desire to make a difference, have an ‘I can do anything attitude’ and tend to be conscious about social causes. They are far more Internet-savvy than their parents and consume most of their media on mobile devices.”
Amenities and features
In terms of just how far property managers need to go to attract this unique generation of renters, it’s increasingly evident that the further—the better. Miles Orth says that investment in having the most amenable and up-to-date property will likely not be a lost venture.
“In our experience, when we’re building or renovating a property, we want to build to the standard that is as far out as you can go, even if we’re spending more money,” says Orth.
For developers looking to start out with the most Gen Y-friendly apartments available, J. Turner Research has compiled a considerable amount of data pertaining to housing preferences among different age groups. A survey completed last summer, entitled ‘Which are the five most important common area amenities to you?,’ lends tremendous insight into such specificities. Batdorf describes some interesting indications from this data, highlighting priorities specific to younger people as well as similarities between all age groups.
“The most desired common area amenities are shared across generations with slight nuances,” says Batdorf. “The response from all generations listed parking, fitness center, outdoor pool and access to walking/bike paths as four of their top five. Fitness Centers were ranked number one, however, by Gen Y and two in the other generational categories. Generation Y listed central Wi-Fi in their top five and Baby Boomers, for example, substituted additional storage.”
Batdorf adds that the five top apartment features overall were walk-in closets, in-unit laundry, balconies and all utilities being included. Generation Y, however, stood out as preferring stainless steel appliances.
Miles Orth notes that changes have also taken place with regard to common areas and clubhouses, and that, once again, technology and the evolution of the Internet has played a major role.
“In an old setting, a pool table or a foosball table was something that was good to have in a clubhouse,” says Orth. “Now they’re looking for golf simulation or gaming in the sense that they have 10 different computer screens or large screen TVs and they can game with people around the country or around the property and have gaming events at the clubhouse, so the types of amenities have changed.”
Community and marketing
One of the more ambiguous aspects of Generation Y might be their level of sociality, and different observers hold different perspectives on this. Whether or not property events are an effective means to promote one’s brand or simply foster a sense of community among younger residents remains an open question.
Stephens of Ross Management holds a positive view on this subject and says the current generation is indeed attracted to community events as long as there’s a specific focus.
“They enjoy hands-on experiences such as sampling and demonstrations,” says Stephens. “Events do, however, need to be carefully planned.”
A recent report by J. Turner Research entitled “Evolving Resident Demographics: Marketing to the Millennial & Baby Boomer Generations,” however, paints a different portrait. According to the data, 60 percent of Millennials surveyed said they do not participate in community-sponsored events.
“It just seems to me that they’re not really participating in those kinds of community events,” says Batdorf. “Social mixers are much more important for older generations.”
While acknowledging that there will always be a number of residents who will not abundantly socialize, Orth says there are still plenty of people in Generation Y who might be drawn to community events and who are worth marketing to in a contemporary way.
“There’s still a large group that are social, and then there are those that are more reclusive,” says Orth. “In that respect, I don’t think there’s a huge difference. What has changed is the nature of the social gathering and the type of gathering and how we reach out to them and how we stay in touch we them—that’s changed dramatically.”
Yet, as differences do exist on many levels between Gen Y and older generations, it is not outside the realm of possibility that some managers might not wish to market to the younger crowd. Batdorf, however, emphasizes that this would be a profound mistake.
“If you’re trying to avoid those people, that’s going to be cutting your nose off to spite your face because they are really the prime apartment renters,” Batdorf says. “It would not be a wise thing to do.”
Orth agrees and posits that appealing to Millennials is not simply a cumbersome requirement to maintain occupancy levels, but also a tremendous profit opportunity.
“This is the generation that’s going to be moving up into conventional multifamily, so marketing to them is vitally important,” says Orth. “Rather than resisting it or worrying about it, operators should embrace it—make the changes that are necessary—and they’ll find that it’s not just about giving. That same population is also interested in paying for a high level of service, so it’s a revenue opportunity in addition to being a necessity.”