Story: Several new reports have been released that have indicated some changes in renter preferences as it pertains to location, amenities, and smart technology. Here are some of the highlights for multifamily owners and investors.
Rent. recently released its Q3 Migration Report which shows a renter preference toward southern U.S. locations. This region topped all others with a 3.7% lead delta for renters, up from 1.7% in Q2 2022 and well above the Midwest (+2.2%), the Northeast (-6.6%), and West (-2.7%). According to the report, Louisiana and Mississippi fueled the rise in southern rental demand.
Further, North Dakota was the most popular state for renters in terms of lead delta, with an increase of 38.7% in Q3. Illinois leads the country in out-migration, with a -46.41% ratio of renters arriving to renters leaving, followed by New York (-44.04%).
According to the new National Multifamily Housing Council (NMHC) Renter Preference Report, renters are more willing to look further afield for homes. “Lockdowns seemingly led to a strong desire for additional space; twenty-eight percent of renters who said they intend to move to a different rental community when their lease expires cited “additional living space” as a reason, up from just 19 percent two years ago.”
Indeed, Redfin found that renters are looking for more space as they are priced out of the home-buying market and are more likely to become forever renters.
“Increasing rental supply and declining prices–along with high mortgage rates, limited inventory and other affordability barriers–mean few renters will become buyers next year. Many prospective first-time homebuyers may instead become move-up renters, upgrading from a small urban apartment to a larger apartment or a single-family rental to fit their growing families.”
These renters, who will indefinitely enjoy some form of remote work, will move toward mid-tier and more affordable markets instead of expensive urban metros. Mid-sized, moderately priced places like Tucson, AZ or Savannah, GA, “will be popular when more Gen Zers age into homeownership”
According to Rent Cafe, the most competitive markets in 2022 were primarily located in the South, similar to the findings of the Rent. report noted above.
According to NMHC, renters desire specific amenities and are willing to pay more. Reported must-haves include a washer/dryer in-unit (92% of renters interested, $54.73 monthly premium), air conditioning (91%, $54.73), soundproof walls (90%, $46.21), high-speed internet access (89%, $47.93), and walk-in closet (88%, $43.46).
Another growing trend is that of smart technology and keyless entry, according to the Multifamily Executive. “In the past, experts have noted smart elevators, virtual doorman systems, and keyless locks as top multifamily technologies. Those features and more have continued to evolve to make day-to-day living more convenient for residents.”
Indeed, Loren Nelson, VP at NELSON Worldwide notes that: “Keyless entry technology allows residents to control access to their building, their units, and amenity spaces using a card, key fob, or even their phone,” says Nelson. “New technology can allow residents to use temporary visitor passcodes or easily access authentication for those needing to enter the apartment, such as a cleaning service or someone delivering and putting away their groceries.”
Expert Take on Tenant Preferences
“With the changing landscape of how people work from home, we have started looking at not only co-working spaces but also work facilitator spaces…These are designated digital creator spaces—dedicated spaces that can be used for podcasting and photography.” — Erin Nies of Mark Odom Studio