Big Demographic Goes Small
- Mar 08, 2021
Attention apartment builders: Go small. Not in the size of your projects or units, but in the size of your markets.
According to the latest market insights from RENTCafe, what were once Millennial strongholds are out of favor with the Zoomers, aka, the Gen Z generation, which was the fastest growing renter segment in the country last year and the oldest of which turned just 23 years of age in 2020.
Or, as the first sentence in the report puts it, “The downtown life in big coastal cities is so last decade.”
Indeed, the latest data shows that small towns in the nation’s heartland “are rewly trending” for Zers, who accounted for a 36 percent year-over-year jump in apartment applications in 2020. At the same time, the number of applications for every other generation—Millennials, GenXers and Boomers—declined 5 percent, 8 percent and 14 percent, respectively.
Put another way, of the roughly three million renter applications analyzed as part of the study, 22 percent were from people born after 1997. These Zers claimed the second largest share of the market, outnumbers only by Millennials, who were responsible for 48 percent of the rental aps taken by landlords. For what it’s worth, GenXers put in only 18 percent of the apps.
The analysis was based on data from over three million rental applications from RentGrow, a renter screening service, for approximately 40,000 apartment communities nationwide. GenZer is defined as people born between 1997 and 2012, while Millennials were born between 1981 and 1996.
Unlike most of their predecessors, Zoomers looked mainly in small towns in the Midwest and the South, spots, the report points out, that are not only more affordable but also offer a “vibrant local scene” and are closer to home. “These young adults … are just starting out in life in times of great uncertainty and change,” the RENTCafe report says.
“The economic and public health consequences of the COVID-19 pandemic have likely influenced GenZers preferences for populated, more affordable cities and town in Mid-America and outside large southern metro areas,” Ronnie Dunn, an associate professor of urban studies at Cleveland State University, says in the report.
In 18 of the top 20 trending locations for these newly minted renters, their share of applications leaped by at least 50 percent “over the course of just one year,” RENTCafe emphasized. Nine of the 20 were in the Midwest; eight in the south, “far from the coastal cities previously favored by Millennials.”
Mostly, they are small and mid-size jurisdictions, largely with fewer than 300,000 residents, a relatively low cost of living and apartment rents somewhere around $1,400, lower than the national average.
Greenville, N.C., ranks No. 1 as the trendiest city for the Z generation. With a population under 100,000, this small college town, is home to East Carolina University and Miller-Motte College. And it registered the largest jump in Zer applications last year—a whopping 84 percent.
Two Arkansas towns—Little Rock and North Little Rock—ranked second and third on the list with respective increases in GenZ applications of 70 percent and 63 percent. Together, they have a population of about 250,000 and an average apartment rent of some $800.
Rounding out the top five are Norfolk, Va., and Lake Charles, La. The former saw a 58 percent increase in applications from Zoomers; the latter, a 57 percent increase.
Three places often thought of as major, big city markets made the top 20 list. But in reality, they have relatively small populations, small enough for the report to label them mid-sized. Minneapolis, population 420,000, ranked 11th; St. Louis, population 308,000, was 16th and Columbus, population 880,000, came in at No. 20.
The report also looked at which cities have the highest share of GenZ apartment seekers. Here, they are mostly college towns or towns located near a college. And all 20 have a larger number of Zoomers than Millennials.
This list is topped by Boulder, Col., where 65 percent of the applicants were Zers compared to 22 percent Millennials and 8 percent GenXers. Davis, Calif., is next at 61 percent, 30 percent and 6 percent, respectively, followed by Conway, Ark., 52 percent, 27 percent and 15 percent.
Bloomington, Ind., and Ankeny, Iowa, ranked third and fourth.
The report also ranks the states with the largest increases in GenZ renters as well as the top cities for GenZ renters by state.