From Gen Z to Baby Boomers: Study Up on the Next Crop of Renters
- Aug 24, 2015
It’s been 11 years since the millennial generation came to an end. William Strauss and Neil Howe, who created the term Millennial, appointed the title to those born between 1982 and 2004. 2005 was the start of Generation Z. The eldest of Generation Z is only 10 years old now, so the housing industry still has a few years to prepare for the first round of student tenants. Millennials, defined as consumers today between 18 and 36 years old, caused a major transition in the way housing was being developed, constructed and managed.
FirstService Residential goes directly to the source for ideas. “We look to the students,” said Bob Scaglion, executive managing director of new business development for FirstService Residential.
“Any time we can run focus groups or we get opportunities to speak in front of student bodies—and we do get a chance to talk to students at NYU and Columbia—we ask them, “What’s aspirational? What would you like to have? How do you want to live?” We take those answers into consideration when we design new developments.”
As of 2015, Millennials—totaling around 75 million—are on track to outnumber baby boomers as the largest and most diverse demographic group in U.S. history. As a millennial myself, I can attest that my peers and I are a different breed when it comes to real estate. We prefer to rent, not buy. We prefer urban areas with convenient access to lifestyle needs like our jobs, pharmacies, grocery stores, banks, and public transit. We prefer online services. We’ve given up privacy in exchange for always being connected to each other with the touch of a button (or should I say, screen).
“What we’ve learned from them is that they want more communal living,” Scaglion said. “They want to live with friends, they want the social interaction, they want more of a community where 10 years ago we were building to a more demanding group that wanted high-end condo-level finishes and were more concerned about the product. Today, the new renters are more concerned about the social life.” That’s not all they’re concerned about.
“There was a time 10-15 years ago when it was all about resort pools, fitness centers and so on—the traditional type of amenities you see,” said Andrew Marshall, CEO of Campus Technologies Inc.
“More and more now, when student residents are surveyed, the Internet as a utility is becoming very close to the most important amenity. I wouldn’t say it’s more important than location but it’s getting right up there with it. By Internet as an amenity I’m referring to Internet that anybody can connect anything to, anytime, and not worry about its reliability or performance. Students want to treat Internet access the same as water coming out of a faucet.” Trying to immediately conquer the wants and needs of a new generation is like trying to understand a teenager’s mood swings: almost impossible. That’s why getting ahead of the game, knowing what to prepare for and putting a plan of action into place is more important than you realize.
“Generation Z is a little more highly motivated,” Scaglion said. “Millennials had a little bit of an expectation that they’d arrive and of course they should get this. The newer generation coming in is a little bit more demanding, a little more vocal, a little more motivated about it. It’s really the Millennials who have started the change in trend, but the newer generation is pushing it at a much more accelerated pace. They’re much more entrepreneurial, much more tech-savvy. It’s just taking what the Millennials started and evolving it further.” Gen Z renters will expect a world of information to be easily available online. Your marketing strategy must start with digital and mobile. Your website’s SEO is extremely important in that you want your website to appear at the top of search engine lists. Once you reel them in you have one shot to make a great first impression.
If your site includes lengthy paragraphs and few images, I can guarantee you Gen Z won’t read it, and they’ll leave your site faster than you can blink. Lisa Trosien, president of ApartmentExpert.com, recommends using short, punchy lines, bullet points and plenty of imagery. Brands that create succinct, memorable content have noticeably higher success rates. Take advantage of social media platforms as well—put your properties on Snapchat, Instagram and Facebook. Videos are your best friend with this demographic. Generation Z has a short attention span, so give your brand a YouTube presence. Make property tour videos and give these potential renters the option of doing a FaceTime tour. This is an extremely convenient method of touring apartments for both the consumer and the leasing agent.
Residents will see it as a great inconvenience if they can’t complete services online and have to instead deal with leasing agents and property management in person or over the phone. Gen Z, and some of the back end of the Millennial group, prefer to submit rental applications, pay rent, submit maintenance requests and access rental receipts online. The Internet becomes even more significant as more and more TV and video programming is taking place in non-traditional formats. Marshall said he thinks we’ll start to see more channels unbundling their streaming over the next three to five years.
“The business of having a traditional cable package is going to go away. It’s never going to disappear completely because there are things like college channels and local sports games that people will continue to consume in that medium, but the importance of having the cable TV amenity is diminishing. It’s not at the point where it’s irrelevant but it’s headed in that direction. A lot of student housing owners and operators are into very long-term contracts with cable TV, and if you’ve got nine or 10 years left on the contract you might be questioning, “is that really going to make it through the 10 years, or are we going to have to do something about amending that?”
What does the Baby Boomer cohort want?
But don’t put the aging population on the backburner. Baby Boomers are entering the downsizing phase, so this is another cohort of nearly 78 million potentially in the rental market. Western National Property Management’s vice president of business development Nick Alicastro said the older generation is actually the one that will have the highest housing needs in the future. He said the larger opportunity and need on a go-forward basis in the next 10-15 years is going to be incorporating the 55 and older group in housing considerations.
“Those people migrate; empty-nesters get out of their homes and go into apartments. Those are the individuals who aren’t going to be satisfied moving from a 2,000-square-foot or 3,000-square-foot home to an 800-square-foot box. So we have to focus on really creating home-like environments, social environments, and ease of living such as in-unit amenities as well as [ensuring] ADA access and elevators.” According to Alicastro, in California, where Western National Property Management is based, the reality that everyone has a car is also a major factor of consideration for properties across the board.
“If it’s a couple, you have two cars. A lot of these older communities that were built up to 50 years ago usually had one household worker with one car. Everyone has cars these days so finding ways to park cars has been an ongoing issue that’s just going to continue even when you have an older generation. And 55 is looking younger all the time—so both people can probably still be working and both probably have cars. Some of these communities that are being built for ‘seniors’ that have one-on-one parking ratios just aren’t making it anymore because people have two cars.”
It’s wise to get ahead of the curve now. Start thinking how you’ll cater to your future renters from Gen Z to Baby Boomers.