Zoning in on Z: Today’s Teens are Tomorrow’s Renters
Millennials' younger siblings will have different needs when their time to rent comes.
By Jeffrey Steele, Contributing Writer
They’re just kids today, still hanging out under their parents’ roofs. But before you know it, they’ll be touring your property, on a hunt for their first homes. Or more likely, they’ll be arranging to lease through their mobile devices, while on the run.
Who are they? They’re Generation Z, the folks born after 2000, whose leading edge is only three or four years away from their very own apartment home.
If you’re still wrapping your mind around the Millennial gang, you’ll recognize some of Gen Z’s traits as having been patterned on those of their older Gen Y siblings. But there are additional characteristics they will call all their own. Learn what the experts believe will define the generation, and it’s less likely you’ll zig when you should have zagged in catering to Z.
Valuing career and lifestyle mobility: Members of Generation Y have proven to be highly mobile, and very open to moving from city to city in quest of career moves, entrepreneurial opportunities and lifestyle preferences. Look for more of the same from Generation Z, whose members will likely amplify those inclinations, said Robert Miranda, vice president of Seattle-based investment banker Moss Adams Capital, an affiliate of Moss Adams LLP. “We expect this generation to be renters for extended periods of time because of that mobility,” he said.
Intent on living urban: Like Millennials before them, Gen Z will be zealous about living in or near city centers, within steps of jobs, favorite eateries and watering holes, cultural and entertainment choices and friends. As the cities grow more popular, rents will rise, and Gen Z will respond with increasing acceptance of smaller, even micro-size units that let them afford being close to everything, Miranda said.
Embracing the sharing economy: Generation Y helped coin the term the “sharing economy.” Its acceptance of that economy gave rise to companies like Airbnb and Uber. “Gen Z grew up in it and were native participants in that from a young age,” Miranda said. “I know families that have kids in Gen Z, who are given smart phones and asked to get Uber to take them to music practice.”
As adult consumers, members of Generation Z will display a zest for sharing ideas and experiences with neighbors, whether in an apartment community business center or the property’s swimming pool, fitness center or billiards room. The concept behind Seattle’s Via6 anticipates Generation Z, Miranda said. At that apartment property, “the amenity space is partly a public space and partly a private space,” he reported. “The first two floors are an upscale market area and a full-service restaurant, and there’s a mezzanine level open to the public. Residents can interact with the public or use private spaces open only to them.”
New views of privacy and ownership: Taking that shared economy notion a step further, those of Generation Z are likely to adopt a view of what they own that is much different than that of previous generations. So says Yat-Pang Au, CEO of Veritas Investments, one of the largest privately-held apartment owners in the San Francisco Bay area. “Their whole concept of privacy and what’s theirs is very different from my generation; I’m 46,” he observed. “These people will live in smaller spaces, and what will make that possible is they will treat the surrounding neighborhood amenities as part of their broader home.”
“They will say, ’Let’s treat my apartment as my bedroom, let’s treat that restaurant downstairs as my kitchen, let’s treat that bar a block away as my family room and let’s treat that park a few blocks away as my backyard,’” Miranda said.
Faster to filter: Members of Generation Z are coming of age with mobile devices in their hands, and that posture will shape how they will process all marketing messages, including those about apartments and condos. So said Gina Reidinger, vice president of San Francisco-based Polaris Pacific, the West Coast’s largest new home marketing and sales brokerage. “This audience has faster filters because they’ve grown up with technology and transparency, and immediacy of information,” she said. “Companies will need to filter out their messaging and clarify main points, or they won’t see the same number of qualified purchasers. Gen Z will cut through the fluff. They’ll want the bottom line and they’ll want it immediately.”
Greater fiscal conservatism: As impressionable youngsters, many members of Generation Z had a front-row seat to watch as their parents painfully wrestled with the Great Recession of 2007-09. Many believe early exposure to cruel economic realities is likely to make Generation Z folks more risk averse and thrifty than their immediate forebears. In short, unlike the Boomers, Generation X or Millennials, Gen Z’s zeitgeist may be marked by fiscal conservatism.
“Today, people are buying larger and larger apartments, in this trend toward ‘mansionization’ we see in New York City and the West Coast,” Reidinger said. “That trend will need to change, and developers will need to provide a more moderate price point because Generation Z will be more fiscally conservative. This group values the American dream, but they‘re more risk averse.”
High expectations of tech: One of the more predictable traits of Generation Z will be not just a desire for but an expectation of connected technology as a centerpiece of their lives. Tolerance for anything but technology’s cutting edge will be zilch among Z. “You will need to see USB ports throughout units rather than just electrical outlets, and built-in screens with wired technology to let them get a car through Uber, or food through GrubHub,” Reidinger said.
Diverse and multi-cultural: Building on a trend spotted in Millennials, Gen Z will be diverse and possess more blended ancestries than earlier generations, Au said. “I think they will not even recognize skin color,” he observed. “They will be more color blind. We’re noticing that 70 percent plus of our renters are not from the San Francisco Bay Area. They are domestic and international renters originally from outside the Bay Area. And their perspective on some of the city’s areas is different from a typical San Franciscan, who would say, ‘Never live there.’
“They’re not encumbered by our prejudices of the past. They minimize some of the downsides and are more inclined to look toward upsides. They’re more willing to accept that grittier neighborhoods can be simply a part of urban living.”