Give Renters What They Want - More Storage!

The latest trends in apartment living are proving that it’s all about generation and location.  As a result, many multi-family developers are focusing on urban projects to attract millennials, the largest population of renters, who want to spend less time commuting and more time pursuing activities and creating a balanced lifestyle.

Jeff Kayce, in a recent webinar for the National Association of Home Builders (NAHB), discussed emerging trends in interior and exterior spaces and how generational differences impact apartment design.  He said, “It’s all about the lifestyle for today’s renters. They want the urban experience of less commute time and immediate access to various activities.” They are willing to sacrifice space for location and quality of life.

With the cost per square foot higher than in outlying neighborhoods, urban living means smaller living spaces.  To offset the higher cost of urban development, multi-family property owners are consistently looking for ways to maximize rental income. With 44% of non-homeowner millennials not looking to purchase a home, but instead choosing smaller living spaces in favor of more appealing locations, storage space isn’t just a want but has become a necessity, and they are willing to pay a premium for it.

This year, Multifamily Executive’s Concept Community conducted a nationwide survey of over 84,000 renters. The findings highlighted that in-unit storage and oversized closet space are highly desired amenities that can increase rent by upwards of $75 per month. Almost half of renters surveyed (49%) said they would pay $75 extra per month for a larger closet (10’ by 6’) versus the standard sized closet (4’ by 6’.)

J Turner Research surveyed Millennials, Gen X’ers, Baby Boomers and members of the Silent Generation. The two younger generations made up 80% of those surveyed. With other hot topics, in general, the older the renter the more cost conscious they tend to be. That is not so in this case. There isn’t a significant demographic difference in willingness to pay for additional closet and storage space. Across the board, when renters were asked if they would consider paying an additional $25 per month, or $100 total for more in-unit storage, surprisingly there wasn’t a significant change in willingness to pay extra. 45% of renters were still willing to pay more rent for more storage.  

Given the results of the survey, when it comes time to remodel or renovate current units or break ground on a new project, it is clear that building over-sized closets is a design feature that will pay off in the end, given that six feet of additional closet space can yield up to $100 more rent per unit per month. To generate increased revenue and appeal to all renters, call Stonebridge Builders to create the design and complete the renovations to your multi-family communities. 

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.