Generation Z Renters Reshaping Student Housing Market
With some of the oldest members of Generation Z coming onto the rental scene seeking out their first college and post-college apartments, developers and property owners must start paying closer attention to this new audience. While Gen Z and millennials have quite a bit in common, they also differ in some fundamental aspects and demand different standards of living in residential spaces. Just when owners and property managers are finding their footing with millennials, Gen Z will reshape the rules.
Who is Gen Z?
Gen Z is the population born in and after 1995. With the oldest members having just graduated college in the last few years, this is the beginning of their descent on the rental market. Since they came of age during the Great Recession and watched their parents struggle to make ends meet, Gen Z has a more conservative approach to spending compared to millennials. They are also less likely to uproot and relocate for a new job, as telecommuting and the freelance career path allows them to create their dream job right where they are. Gen Z is a generation that has grown up with standard two-day delivery, on-demand TV shows, movies downloaded within a minute and food from almost any restaurant delivered to their doorstep within the hour. They are a generation accustomed to convenience and instant gratification.
Catering to Gen Z
When it comes to servicing the next generation with spending power, owners and property managers may need to shift their focus off of the biggest, splashiest amenities like golf simulators or screening rooms and onto quiet study areas and organized experiences within the community. Gen Z is less concerned with luxury in-unit amenities and top-of-the-line finishes and more drawn to creating a sense of community with those living around them, so holding regularly scheduled resident events will go a long way. While extra in-unit extravagances aren’t necessarily going to seal the deal with the Gen Z crowd, green-living touches might. LED lighting and energy-efficient appliances and windows are big factors in getting the attention of Gen Z and the reasoning is two-fold. First, as previously mentioned, they are more interested in saving money than their predecessors; and second, this is a generation that cares about the environment and generally makes conservation a priority on their list of causes.
Industry experts claim that due to the accessibility created by ride-sharing apps, fewer young adults will be buying cars, leading some forward-thinking residential communities to provide on-site car sharing services. This sharing economy can also be found in “common goods rooms,” which are communal rooms that contain larger items that renters don’t want to purchase or store in their smaller spaces, such as ladders or tools. This type of built-in convenience is key.
Personalization is another way to attract Gen Z renters. This generation is able to personalize everything around them and curate their environment to contain exactly what they want to consume, whether it be music through a Spotify playlist or news through apps and e-newsletters. They want to be able to do the same with their day-to-day lives. Offering pet sitting/walking, laundry, dry cleaning, housekeeping, studio fitness classes, and other services that can be tailored to their lifestyle will make for a happy resident.
Last but certainly not least, a generation often described as “digitally native” has certain expectations about technology in their living space. While internet and Wi-Fi capabilities were once billed to millennials as state-of-the-art amenities, they are now expected as baseline living conditions for Gen Z. In order to get their attention, Wi-Fi must be the fastest and most reliable service available to leave an impression. Online portals for maintenance requests, paying rent, and finding building info are another expectation of these up-and-coming renters.
How to Reach Gen Z
As one would imagine, marketing your property to Gen Z should include a heavy online presence. Using social media with dynamic visual content is critical. However, even in this digital age, the age-old word-of-mouth marketing campaign is still as effective as ever. The difference is word of mouth can now be found online in the form of reviews. Many sites, such as Yelp, Google, Angie’s List and Facebook serve as platforms for posting and reading both negative and positive feedback. While a few negative reviews are bound to happen, the way in which they are handled can make or break the way the business is perceived by a reader looking for guidance. Quickly and directly addressing the reviewer and showing an effort to make the situation right is key. Accepting the feedback and offering a solution, whether publicly or privately, goes a long way for word of mouth. If potential renters are reading, they will be encouraged by a company’s proactive approach to feedback.
Overall, while millennials and Gen Z overlap in some ways, their differences will become more apparent as Gen Z ages and gains more spending power. Student housing developers, owners and property managers should be prepared and have the foresight to adapt early and change with the times.
— Holly McQueen is the vice president of asset services for GMH Capital Partners Asset Services, L.P. (“GMH”), a nationally recognized leader in the commercial real estate market specializing in the areas of investment, development, construction and asset management.