Given current market conditions, now is the time to analyze who are your renters and who they will be in the future, recommends John Burns Real Estate Consulting.
The consulting group analyzes trends for their clients and provides insight into today’s renters.
This analysis shows insight into market-appropriate unit sizes and configurations, new amenity trends, and the appropriate rent levels necessary for successful apartment lease-up and tenant retention.
Who are your renters? Not as young as you may think
“While 26 percent of renter households in the U.S. are between the ages of 25 and 34 today, the next largest segment of the market is between the ages of 35 and 44 (families), and beyond that, between the ages of 45 and 54 (empty nesters).
“These older renters will continue to seek more space in a suburban environment with good work-from-home amenities,” write Lesley Deutch and Ken Perlman of John Burns Real Estate Consulting.
Affordable rents continue to be a challenge
“More than half of renters in the U.S. can only afford rents less than $1,200.
“John Burns Real Estate Consulting’s national apartment-demand model is based on income levels across the U.S. and indicates about 60 percent of renter households earn less than $50,000 per year, which translates to a maximum rent of about $1,200 per month.
“While construction activity is increasing for luxury apartments (due largely to increasing costs associated with new building), the affordable sector continues to be hampered by the limited availability of tax credits and capital financing. The opportunity here is not just to provide affordable housing, but creative use of space in market-rate product, including more roommate-friendly units and smaller spaces to keep overall rents lower,” they write in the report.
The apartment market offers many opportunities, even in the era of COVID-19 and a recovering job market. Understanding renter profiles to design the appropriate product will be key in the years ahead as the U.S. economy recovers from the recession and you find your future renters.