Top 5 Apartment Rental Trends for Millennials and Gen Zers in 2023

Getting a foothold in the property market continues to be a significant challenge for Millennials and their younger Gen Z cohorts, now beginning to come of age. In 2022, rising home prices, decreasing inventory, and overall higher mortgage rate options made it even more difficult for younger buyers to join the property ladder. This trend will continue in 2023, with younger generations increasingly having to or choosing to go with rental housing rather than buy their homes.

With rental demand expected to remain strong – especially in larger metropolitan areas – it’s critical that apartment property management take housing market conditions, rental market conditions, and younger residents’ preferences into account when evaluating community improvements and resident retention ideas for 2023.

Rental Market Indicators for 2023

2022’s inflation spike hit young residents in expensive metros like Seattle, Miami, and New York City hard, while young renters in areas like Minneapolis, Denver, and St. Louis saw the least impact on their rental rates. By the end of last year, alongside Gateway locations and the Midwest, Miami was top of the list for year-over-year apartment rent growth nationwide. On the other hand, in the same period, cities like Las Vegas and Phoenix saw a significant downturn in median rent price, decreasing as much as 22% compared to 2021.¹

With the cost of a typical rental unit and other key expenses going up much faster than their salaries, Millennials and Gen Zers are feeling the pinch of inflation harder than most Americans. Given their lower average incomes, an increase in monthly rent prices represents a more significant portion of wages than it does for older groups who earn more.²

Like the 42% of Millennials who own a home at age thirty, compared to 51% of Boomers and 48% of Gen Xers, for Generation Z the economic future increasingly appears to make renting an apartment the most viable option.³ Recent statistics reflect this dynamic with rent growth projected at 6.3% in 2023, ahead of historical rent trends and home price growth.⁴

Top 5 Apartment Living Trends for Millennials & Gen Zers

Millennials and Gen Zers are sophisticated consumers with the power to reshape the apartment rental market to better meet their housing needs. According population estimates from the U.S. Census Bureau, Millennials surpassed Baby Boomers as the largest living adult generation in 2020, and have since been dubbed the “Generation of Renters”.^5,6 Even more tech-forward and mobile-first than Millennials, the younger “Zoomer” (Gen Z) cohort now entering the market as apartment residents represents 21% of the population of the United States.⁷

Meeting the needs of Millennial & Gen Z apartment residents should be the focus of every multifamily property manager across the country. Being able to provide the right kinds of amenities and services is critical. Here are 5 significant trends that are influencing young residents’ decisions:

1. Technology

Younger residents are looking for in-unit and on-site technology amenities such as smart temperature controls, smart locks or access controls, and smart apartment package lockers for secure package deliveries.

2. Package Lockers or Package Rooms

Recent statistics show that 4 out of 5 Millennials do most of their shopping online, and 74% of Zoomers turn to mobile first when they do decide to buy an item.^8,9 With all the online shopping comes a huge volume of package deliveries and the expectation that they will be secure and accessible once they arrive on-site. Smart parcel locker solutions are a highly effective, secure, and cost-effective solution to this critical need.

3. Connectivity

This no longer means a solid WiFi connection! It also means connecting to other people and our environment visually, physically and socially. Use design principles that allow residents to meet and engage with one another. Rather than enclosed areas or those only designed for a specific use, try and create more open and shared spaces in a building, such as community gardens or rooftop terraces.¹⁰

4. Walkability

Access to nearby services and amenities such as restaurants, theaters, entertainment, and work spaces are important to these two demographic groups. Consider ways to make your multifamily rental property a more dynamic and engaging mixed-use community.

5. Eco-Friendly Amenities

Younger residents, Millennials in particular, are interested in saving water and energy to help the environment and lower their bills. Install energy-saving appliances like low-flow shower heads and ensure recycling stations are available on the rental property. Adding on-site bicycle racks can also encourage eco-friendly commuting.

Convenience-Based Apartment Amenities Are Key for 2023 and Beyond

From smart home technology to secure on-site delivery, communities must deliver more for the current and prospective younger generations of apartment residents. Millennials and Gen Zers expect to get what they want, where and when they want it – often within a day of ordering it. Secure delivery using solutions like a smart electronic locker or package room is key to satisfying younger residents – both in 2023 and beyond.

“The multifamily industry is always innovating and looking for ways to create the best living environment for their residents,” points out Colleen Lambros, Chief Marketing Officer at Parcel Pending. “Now the challenge is to provide amenities and services that directly integrate with today’s consumers and their elevated expectations.”¹¹

Ready to lock in your package management solution? Contact a Parcel Pending by Quadient representative today.

Sources:

1. Costar Group. Apartments.com Publishes November 2022 Growth Report. www.costargroup.com. December 2, 2022. https://www.costargroup.com/costar-news/details/apartments.com-publishes-november-2022-growth-report
2. Anderson, Dana, Theodore Velentzas and Sheharyar Bokhari. Millennial and Gen Z Renters Have Personal Inflation Rates Above 11%, Compared with 8.5% For the Typical American. www.redfin.com. September 1, 2022. https://www.redfin.com/news/inflation-renters-gen-z-millennials-2022/
3. Team Poplar. 5 Ways Millennials are Changing the Rental Market. www.poplarhomes.com. August 10, 2022. https://www.poplarhomes.com/real-estate-investment/5-ways-millennials-are-changing-the-rental-market/
4. Hale, Danielle. Housing Forecast 2023. www.realtor.com. November 30, 2022. https://www.realtor.com/research/2023-national-housing-forecast/
5. Team Poplar. 5 Ways Millennials are Changing the Rental Market. www.poplarhomes.com. August 10, 2022. https://www.poplarhomes.com/real-estate-investment/5-ways-millennials-are-changing-the-rental-market/
6. Editors. 7 Rental Trends to Watch in 2023. www.rentalhousingjournal.com. January 1, 2023. https://rentalhousingjournal.com/7-rental-market-trends-to-watch-in-2023/
7. Martin, Michelle. 24 Gen Z Statistics That Matter to Marketers in 2023. www.blog.hootsuite.com. August 30, 2022. https://blog.hootsuite.com/gen-z-statistics/
8. BusinessWire. CouponFollow Millennial Shopping Habits Report Find 73% Changed Shopping Habits Due to Pandemic. www.businesswire.com. September 15, 2022. https://www.businesswire.com/news/home/20220912005909/en/CouponFollow-Millennial-Shopping-Habits-Report-Finds-73-Changed-Shopping-Habits-Due-to-Pandemic
9. Martin, Michelle. 24 Gen Z Statistics That Matter to Marketers in 2023. www.blog.hootsuite.com. August 30, 2022. https://blog.hootsuite.com/gen-z-statistics/
10. Gruber, Johanna. Gen Z Renters: What You Need to Know About the Next Generation of Apartment Residents. www.butterflymx.com. https://butterflymx.com/blog/gen-z-renters/
11. Lambros, Colleen. Rising Consumer Expectations: Creating New Challenges & Opportunities for Multifamily Communities. www.parcelpending.com. October 4, 2019. /en-ca/blog/rising-consumer-expectations-creating-new-challenges-opportunities-for-multifamily-communities/