Try as you may, but Millennials can no longer be overlooked. They’re the nation’s fastest-growing demographic, and a demographic already 71 million people strong. It’s become increasingly evident that in order to be successful, owners and property managers need to understand and respond to the needs of this generation.
By the Numbers
Baby Boomers may be the largest demographic today, but they’re losing pace with Millennials. In 2019, for the first time, there will be more Millennials than Boomers.
Millennials (born between 1985 and 2004) are entering the stage in life where, as young adults, they begin to form independent households. The share of Millennials in their 20s living on their own will rise from one in seven to one in two. There are roughly 45 million Millennials in their 20s today, which has proven a large driver of rental demand.
Older Millennials, those who are now entering their 30s, were initially slow to form new households. They came of age during the recession and, as a result, often lived with parents or grandparents. Those Millennials have since aged and have begun to live independently. Millennials aged 30 and above have formed 10 million new renter households over the past decade alone.
“The overhang of the recession, high student debt levels, limited new construction of starter homes, and the ongoing rise in home prices present constraints for young would-be buyers,” notes a recent study by the Joint Center for Housing Studies at Harvard University. The report projects continued growth in renter households over the next 20 years, driven primarily by Millennials in their 20s and 30s.
And Millennials aren’t just renting – they’re spending a lot of money on rent.
Recent studies show that Millennials are spending more on rent than generations past. Millennials now spend $93,000 in rent, on average, by the time they turn 30. Gen X paid just over $82,000 and Baby Boomers spent just $71,000 when adjusted for inflation.
These numbers are expected to climb. Already, younger Millennials are spending over $97,000 on rent by the time they turn 30, and Gen Z is expected to spend more than $102,000 by the time they reach 30.
And it should come as no surprise that Millennials who are dropping that kind of cash on rent will want a premium rental experience. So, how do landlords and property managers respond? It starts with understanding what Millennials want out of their renting experience. Only then can you effectively respond to capture the Millennial market demand.
Appealing to Millennials
Millennials are the first generation to grow up with technology at their fingertips. They grew up with computers in their homes, and were the first generation to own cell phones en masse. Their affinity for technology does, and will continue to, influence how Millennials do business – as renters, property owners and employees.
Property management companies are still trying to understand what this means. Right now, the average property manager is 47 years old. They often don’t see eye-to-eye with Millennials, or understand their mindset. It’s becoming abundantly clear that the property management industry will need to attract new talent and better integrate new technology if it’s going to respond to Millennial demands.
We’re starting to see this play out, albeit slowly. Most property management companies are hesitant to adopt new technology. Typically, the status quo prevails.
But it doesn’t need to be that way. Change is good. And as the renter demographic changes, the property management industry needs to grow and adapt as well. Like it or not, technology will be the locus of these changes.
What Millennials Want
Millennials are an incredibly diverse demographic. After all, there’s a reason why Millennials have been dubbed the “snowflake” generation – no two are exactly alike.
That said, in my experience, first as CEO of Starwood Waypoint Homes and now as co-founder of Mynd, a tech-enabled property management company, there are several parallels among Millennials that property managers can respond to. Let’s look at a few.
- Millennials value mobile and electronic communication. Traditional communication isn’t sufficient. Nowadays, Millennials want their property management company to use omni-channel communication. Companies need to build a customer service platform that allows property managers to communicate however the resident prefers: by text, phone, email, maybe even via social media.
A platform that facilitates omni-channel communication is also beneficial for property owners. These platforms can track management response times, resolution times, and customer satisfaction. It’s similar to the technology that’s being deployed in the SAAS industry, but that has been slow to take root in the property management industry to date.
- Millennials have demanded an easier leasing experience. Millennials grew up with helicopter-parents who shuttled them from practice to practice, to school, to practice, to soccer game to dance recital to SAT prep classes. Millennials are used to a high-paced lifestyle and seek instant gratification. Property managers need to respond accordingly.
And there are several ways they can.
At both Waypoint and Mynd, we’ve created an easier leasing experience through the use of technology like smart locks and 3D tours. This allows us to host self-showings, where prospective tenants can actually get in and tour a unit on their own time. We’ve built out a mobile app that then facilitates lease applications, lease executions, and lease renewals. We’ve turned the leasing process on its head, primarily in response to Millennials’ demand for a more convenient leasing experience.
- Millennials love online everything. For better or worse, Millennials often like to avoid face-to-face communication. Some don’t even feel comfortable picking up the phone to call their landlord with a repair or maintenance request. We’ve responded by creating a resident app that allows tenants to do everything from pay their bills online to submit work orders to management. With the click of a button, residents can upload photos and videos to help describe their repair and maintenance issue. This allows property managers to more accurately diagnose the issue, and as a result, resolve the issue in less time.
- Millennials are an experience-oriented generation. Unlike generations past, Millennials don’t look at their apartments as just a place to live. They look at where they live as part of an overarching lifestyle. As a result, they’re willing to pay a premium to live in buildings with curated activities and experiences. Naturally, this is easier to achieve in larger apartment complexes.
But that doesn’t mean property managers can’t facilitate experiences for tenants in smaller properties.
We’re starting to see forward-thinking property managers arrange group deals with local businesses in order to provide residents with discounts on things like pizza, dry cleaning and theatre tickets. As property management companies scale, they can create bundled discounts on things like furniture, cable and internet. Sure, it may not be the same as having a monthly wine and cheese night at the roof deck pool, but these are amenities that add value for renters who increasingly pay an exorbitant share of their monthly income on rent.
Responding to Millennial wants and needs isn’t just important for tenant attraction. It’s also important for finding highly-qualified tenants. We’ve deployed this approach at Mynd and we’ve had zero delinquencies and zero evictions to date with the residents that we placed with our proprietary tenant screening methodology.
We’ve learned that this approach isn’t just good for owners – it’s good for residents, too. Residents love tech-enabled property management platforms.
The Millennial population is about to explode. Owners who leverage an assortment of new technology will be well-positioned to capture this demographic, and capturing this demographic will be crucial. Owners who fail to get ahead of this wave will most certainly be left behind.