The "Next Generation" Apartment - survey results of what renters really want

What is The Next Generation Apartment?  Read on for some interesting stats on what renters want based on results from the recent MFE survey.

Multifamily Executive Magazine recently engaged their Concept Community data partner, J Turner Research, to uncover the wants and needs of the next generation of renters in one of the largest research studies collecting over 84,000 responses nationwide. They dove deeply into the question of which unconventional amenities are renters willing to pay for.

The multifamily industry is consistently trying to come up with new ways to entice renters; upgraded interiors like hardwood flooring versus carpet, stylish lighting and trendy lifestyle amenities. But are those efforts attracting renters who are willing to pay extra for them? The clear answer from the research is No, especially given the consistently increasing rental rates over the past several years. But there are some exceptions, and if you’re looking to make some changes to your community, considering certain amenities over others may pay off in the end.

Nationwide, 84,924 residents living in 1,555 communities representing 26 apartment companies responded to the J Turner research survey. The majority of respondents were Millennials (18-34 years) at 59%, followed by Gen Xer’s (35-50) at 25% with Baby Boomers (51-70) and the Silent Generation (71 and older) combined at 15%.

The study was weighted to gain greater insights into certain topics like health and fitness amenities, electric car charging stations, bike storage and bike sharing opportunities, and Common Area and Smart Home upgrades. Here’s how they stacked up:

Smart Home Technology: Sure! If it saves money

Renters want technology options that will ultimately save them money: number one on the list is free, in-home Wi-Fi, followed by smart thermostats, and then Energy Star kitchen appliances. However, it’s not just about money, they also want technology options offer convenience like keyless electronic front entry, in-unit built-in USB charging ports, motion-detection cameras, and motion-sensing lighting. Unfortunately, the survey didn’t yield statistics on the additional monthly amount renters are willing to pay, but the desire for money-saving smart technology was consistent throughout all demographic groups and spanned all generations.

24/7 Package Lockers: They want it!

Over the past several years, the recent popularity of online shopping has substantially increased the volume of packages delivered. There is minimal impact to single family homes but has a dramatic affect in multi-family residences. When asked how many packages residents receive per month, excluding the holiday season, over 25% answered at least one, 20% said two while 17% said 5 to 10. Owners and managers are having trouble keeping up with the increased volume and often have to come up with new systems for making sure packages are delivered securely to renters.  In some communities, because packages can go missing once delivered to a doorstep, residents authorize entry to their unit for package delivery in their absence. Despite creative approaches, over 27% of respondents said they have experienced problems or delays in receiving packages. When asked to rate the importance of 24/7 access Package Lockers, over 28% rated secure on site package storage as a top priority amenity and are willing to pay for it. 20% said they would pay additional rent of $5/month for this amenity.

Fitness Classes: Some do, most don’t.

The survey asked renters to express their interest in several fitness related amenities, among them were yoga rooms, spin studios, golf simulators and conventional fitness equipment with Bluetooth connectivity etc. Three unconventional fitness amenities stood out as having the greatest interest and potential revenue generating impact: fitness classes, steam rooms and walking trails. 46% of all renters are willing to pay at least $5 extra per month for fitness classes. Of the 46%, 14% said having fitness classes would be worth an additional $15 in additional rent per month.  Steam rooms came in a close second with 43% of all renters willing to pay an extra $5/month. Of that 43%, 12% said a steam room would be worth $15/month extra.

Bike storage: Yes… if they have a bike or plan to get one.

Over a third (32.3%) of all renters currently own a bike and 11.8% more say they plan on getting one in the near future. With 44% of renters having a potential need for bike storage, does it make sense to create a designated bike storage space? The stats look good on this one, especially when you consider that 20% of all renters, whether they own a bike or not, are willing to pay $5/month for bike storage. 7.4% would kick in an additional $10/month and 4% would pay $15. In the end, 30% of all renters are willing to pay for bike storage, independent of bike ownership.

Bike sharing: Nah, not at this time.

The results show that while renters are enthused by the idea of a bike share program, few are willing to pay for it. Over 10% of all renters showed great enthusiasm for bike sharing. Another 22% ranked their interest at 5 on a 10 -point scale. However, when it came to putting money where their mouths are, only 26% are willing to shell out even $5/month for it. More renters are willing to pay for bike storage than bike sharing, so save the upfront and ongoing expense of a bike share and build a secure bike storage facility.

Electric Car Charging Stations:  Nope!

J Turner’s Survey results found that 15% of renters intend to purchase an electric vehicle within the next 5 years. Of this 15%, just over half would be willing to pay for on site charging stations. However, that still leaves 85% of renters with intention to buy and no need for EV charging stations on-site.

When considering adding new amenities that will benefit renters and bring the biggest bang for your buck, the research shows that offering bike storage, providing 24/7 Package Lockers and upgrading units with smart technology are the best bets.  Stonebridge Builders specializes in common area upgrades and build outs for added amenities as well as in-unit renovations. Call to schedule a consultation today to generate more income tomorrow!

Look for full survey results of “the Next-Gen Apartment” study when they’re officially released at the 2016 Multifamily Executive Conference next month.

What are renters willing to pay extra for?

Research shows that renters are often willing to pay a little bit more for extra amenities and upgrades. Multi-Family Executive’s Concept Community surveyed more than 84,000 renters nationwide to determine their wants and needs and what they were willing to pay extra for. One big question was Carpet or Hardwood? Another was parking? Will renters pay extra for a designated parking space?

As it turns out, there are some pretty clear trends, and age is the greatest predictor of what renters value and will pay for. When asked if they would pay extra for hardwood over carpet throughout all of their living spaces, the overwhelming result is that the younger the renter, the more inclined they are to say “Yes!”  Roughly 50% of Millennials and Gen Xer’s would pay $75-100 more every month for hardwood, whereas only 40% of Baby Boomers and 26% of the Silent Generation are willing to do so.

OK, so they want it and are willing to pay a little extra for it, but does it make sense? It may when you consider the average Millennial rents for 6 years prior to purchasing their first home, and despite the fact that mortgage rates are at an all time low, property values and home prices have increased at a rate that exceeds affordability for most.

It’s the age-old question of cost versus value. In virtually every case, the initial cost of installing hardwood over carpet is higher. However, over time it generally proves to have greater value given how long it lasts with proper maintenance.

If initial cost is the only issue considered, carpet is the clear choice over hardwood. However, when factoring in increased rental income, the choice is not quite as clear. Adding $75-100/month of additional rental income can make up the difference in as few as one to two years.

What about parking? 67% of renters own one car. 21% own two. And 9% don’t own a car at all. Concept Community posed the question of whether or not they would be willing to pay additional rent for a designated parking spot or a dedicated spot in a carport with roof cover? Of the 84,000 renters polled, 60% said they would pay for a designated parking spot. But who would pay, for what and how much?

A specific amount was set for different types of spots. $25 for a dedicated parking space and $75 for a dedicated spot in a carport. As it turns out, there is a generational trend to paying for parking in a multi-family and apartment communities. Despite the fact that rental rates are continuing to increase, every generation was willing to pay $25 for a dedicated space over a free one. However, the older the driver, the more willing they are to pay for a space to call their own rather than search for parking daily.

To no surprise, there was far less enthusiasm for paying $75 for a space in a carport. Gen X-ers were most willing to do so, followed closely by Baby Boomers and Millennials. The Silent Generation weren’t so much. These results make sense whenconsidering 28% of Gen X-ers and 26% of Baby Boomers said they owned two cars, versus 17% of Millennials and only 15% of members of the Silent Generation.

So, does it make sense to consider charging additional rent for designated parking in your community? It probably doesn’t make sense to make it mandatory. However, if there are some renters who clearly want it and are willing to pay for it, perhaps offer it as an optional amenity at an additional cost to the standard rental rate?

If you’re interested in the full results of the Concept Community survey, The Next-Gen Apartment: What Renters Want,  it will be presented at the Multifamily Executive Conference in September.