What renters want

The multifamily rental market is expanding, presenting property owners and managers with the challenge of sustaining high occupancy levels. The increase in available rental choices requires you to differentiate your properties and provide attractive incentives for prospective renters to choose your community. To remain competitive, property managers must grasp the market trends and renters’ desires.

Understanding the multifamily rental market

Kwame Donaldson, economist at AppFolio, points out that nearly 1 million multifamily rental units are in the pipeline, representing a record-setting pace of construction—a detail gleaned from research based on data from the U.S. Census Bureau. Since 2011, new construction has consistently outpaced the completion of projects, leading to an accumulation of units under development. The Great Recession’s impact on the construction labor market, which saw a significant reduction in the workforce, delayed building and exacerbated the situation. The pandemic introduced additional challenges, including supply chain disruptions and labor shortages, despite continued robust demand for apartments and historically low financing costs.

However, there has been a recent decrease in building starts attributed to aggressive interest rate hikes and improved labor and supply chain conditions. This has led to faster completions and a reduction in the construction backlog. Donaldson predicts it will take approximately 28 months to clear the current construction pipeline based on the average pace of completion over the past year. Despite this projection, the near-term outlook remains optimistic, with an expected delivery of nearly 500,000 new multifamily rental units annually in 2024 and 2025.

This volume of completions is unprecedented in recent history and signifies a notable increase over typical two-year delivery totals.

So, what does this mean for operators of multifamily rentals? More competition. Donaldson points to other data that hints at how to excel in such a market.

Demographic factors

The influx of Generation Z into the housing market, combined with the rising average age of first-time homebuyers, now at 35, indicates a continued need for rental properties among this group. The challenges of achieving homeownership, spurred by elevated mortgage rates and a scarce housing supply, are expected to keep a significant number of prospective purchasers within the rental sphere. Focusing on enhancing the leasing and living experience to meet the changing preferences of this demographic can establish your property as a preferred option for multifamily residences in a competitive environment.

It starts with marketing

There are plenty of ways to make your property stand out in a saturated market. Here are some ideas:

• Leverage social media. Given this demographic data, there’s a high likelihood that prospective renters in your market are active on social media. Tailor content to your target demographic on platforms like Facebook, Instagram, and TikTok to reach prospective renters. To increase engagement and shares, design posts that showcase your property’s amenities, upcoming events, and testimonials from satisfied residents. Monitor likes, shares, and comments to refine your strategy and pinpoint the most compelling content.
• Create a better leasing experience. A first-rate leasing experience is crucial for attracting and retaining new renters. Streamlining the leasing process with technology can make it more enjoyable for both you and your potential renters. They want a truly digital experience.
• Employ online applications. Ensure you have a robust online application system. It should be user-friendly and provide a secure platform for submitting personal information.
• Communicate instantly. Research shows that almost three-quarters of prospective renters expect an answer to their inquiries within 24 hours. Ideally, you should aim to respond to leads within one hour, as this shows prospective renters that your team is attentive and values their business. But this is easier said than done. That’s where artificial intelligence (AI) comes into play. Large language model-based AI has come a long way. The technology has paved the way for AI leasing assistants to instantly provide thoughtful, personable responses to prospective renters at any hour so that your team has more time to focus on higher-level, revenue-generating priorities.
• Provide flexible scheduling. To suit various schedules, be accommodating with property viewing times, including weekend or evening slots.
• Offer virtual tours. High-quality virtual tours of the property allow potential renters to view the space conveniently and help those who cannot visit in person.
• Engage with residents for enhanced retention. Once leases are signed, focus on retaining existing residents through engagement and exceptional service to keep occupancy rates high.
• Host community-building initiatives. Your efforts to foster a sense of community can have a profound effect on resident satisfaction and retention. Organize social events, such as community barbecues, holiday parties, or workshops, to encourage interaction among residents. With roots established, relocating at the end of the lease term becomes less desirable.
• Prioritize responsive property management. Responsiveness to maintenance and concerns is key to resident retention. An online system that tracks requests and communicates updates to residents shows that their comfort is your priority. Ensure your property management team is accessible and that maintenance requests are handled promptly and effectively. At scale, this can become a challenge, especially after regular business hours. Be sure to offer a tool that lets your renters:
  • Seamlessly submit maintenance requests
  • Receive timely responses through their preferred medium at any hour
  • Perform basic troubleshooting for common issues
  • Incorporate smart home features

Smart home technology elevates your property’s appeal, especially to the renter generation. One example is smart thermostats, which are desirable to renters for several reasons. These include energy efficiency (they reduce energy costs with programmable temperature settings) and user convenience (residents can adjust the climate remotely, adding a level of comfort).

Customizing leasing and resident experiences to the preferences and needs of renter demographics is crucial for maintaining high occupancy rates, especially in a market poised to see a significant increase in new apartment units. By understanding and addressing the specific desires and expectations of your target customers, you can create a living environment that stands out from the competition. For additional strategies and insights to help scale your marketing efforts, as well as other helpful resources, check out appfolio.com/industry-insights.