3 Factors Changing the Multifamily rental Landscape: Supply, Demographics, and Technology

By Leah Maher

The multifamily rental market is evolving with changing tenant demographics, technological advancements, and changing work dynamics, not to mention that a ton of new construction is about to wrap up. This shift presents new opportunities for property managers to leverage
the demographic data and today’s innovative technologies to enhance their operations, increase foot traffic, and improve tenant retention.

THE IMPACT OF NEW APARTMENT SUPPLY ON THE RENTAL MARKET
A record number of multifamily units are set to hit the market this year. In 2022, building permits were issued for 707,000 multifamily units, the highest number since 1985. Projects initiated two years ago are now reaching completion. As a result, 2023 saw the most apartments enter the market since 1987. And 2024 is on track to surpass those numbers. Several factors are driving this increase in construction. Low interest rates in the early 2020s made financing more accessible for developers, while strong rental demand and rising rents
incentivized new projects. The surge in new apartment supply is already having a noticeable impact on rent prices and vacancy rates, which demonstrates the economic relationship between supply and prices. For investors and developers, these trends highlight the importance of carefully considering local market conditions.

EVOLVING TENANT DEMOGRAPHICS AND PREFERENCES
As noted in the previous section, markets with the most available multifamily properties are seeing a decline in rental value, which equates to more choice for the renter when selecting a home. To make sure your rentals are beating the competition, let’s discuss the insights we can deduce from renters’ demographic trends.

Gen Z’s Growing Influence

The majority of households are headed by adults under the age of 35. Crazy as it sounds, the oldest Gen Z’ers are nearing 30 years old. As a dominant force in the rental market, Gen Z’ers
are more likely to seek out properties with eco-friendly features, smart home technologies, and shared spaces that foster social interaction.

To attract and retain Gen Z renters, property managers should focus on:
✓ Providing self-touring options for interested renters, such as InstaShow
✓ Implementing robust digital platforms for communication, maintenance
requests, and rent payments
✓ Offering flexible lease terms and move-in options
✓ Creating Instagram-worthy spaces and amenities that appeal to social
media-savvy tenants
✓ Emphasizing sustainability initiatives and green building practices
✓ Providing high-speed internet and tech-enabled amenities throughout
the property

Remote Workers

Remote work opportunities have skyrocketed since the pandemic, significantly impacting rental property design and amenities. To meet the demands of remote workers, property managers are also focusing on:

• Upgrading internet infrastructure to
  provide reliable, high-speed connectivity
• Offering private meeting rooms and
  business centers
• Creating outdoor workspaces with Wi-Fi
  access
• Implementing package management
  systems to handle increased deliveries

Increasing Number of Older Renters

While most renting households are headed by adults under 35, the 65+ age group is becoming the fastest-growing renter cohort in the United States. With specific needs and preferences that differ from younger demographics, they often seek:

• Accessibility features and single-level
  living
• Community spaces that promote social
  interaction
• On-site fitness centers and wellness
  programs
• Proximity to healthcare facilities and
  public transportation
• Enhanced security measures and 24/7
  maintenance support

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NEW BUILDS COME WITH NEW TECH: HIGHER RENTAL VALUE AND MORE REMOTE WORK OPPORTUNITIES FOR PROPERTY OWNERS

With 2022’s new construction finally market ready, most new builds come equipped with the latest technology. Built-in tech means higher rental value, better chances of attracting quality tenants, increased automation for property managers, and more opportunities to effectively manage multifamily units remotely.

Rise of Smart Home Features in Rentals

Smart home technologies offer convenience and energy efficiency to tenants while providing valuable oversight and notifications to property managers. Popular smart home features in rental units include:

• Smart thermostats for energy management
• Keyless entry systems, smart locks, and access control management
• Voice-controlled lighting and appliances
• Smart security cameras and doorbell cameras
  

These technologies not only attract tech-savvy tenants but also offer property managers improved security, reduced energy costs, and remote monitoring capabilities. Smart home features can lead to higher rental rates and increased property values, making them a worthwhile investment for many property owners.

ADOPTION OF AI AND MACHINE LEARNING IN PROPERTY MANAGEMENT

Artificial intelligence and machine learning are transforming property management practices, adding security amid the rise of real estate scams, and offering innovative solutions for various aspects of operations:

• Tenant screening: AI algorithms can
  analyze applicant data quickly and
  accurately, reducing bias in the selection
  process. The latest touring software
  verifies identities by comparing real-time
  selfies to government issued IDs, also
  captured in real time.
• Predictive maintenance: Machine
  learning models can forecast equipment
  failures, allowing for proactive
  maintenance and reducing downtime.
• Energy optimization: AI-powered
  systems can adjust building systems in
  real time, maximizing energy efficiency.
• Chatbots for customer service: AIdriven chatbots can handle routine
  inquiries, freeing up staff for more
  complex tasks

DIGITAL TOOLS CHANGING TENANT COMMUNICATION AND PROPERTY MARKETING

The adoption of property management software and apps is revolutionizing how property managers interact with tenants and market their properties:

• Online portals for rent payments, maintenance
  requests, and lease management
• Virtual reality tours for listings, and self-tours for
  increased traffic and secure access management
• Social media integration for community engagement
  and brand building
• Data analytics tools for market analysis and
  performance tracking
  

These digital tools provide 24/7 access to services, streamline communication, and offer valuable insights into tenant preferences and behavior.
As technology continues to evolve, its integration into rental properties will likely deepen, offering new opportunities for innovation in the multifamily sector. Property managers who embrace these technological advancements will be better positioned to meet the changing needs of tenants and stay competitive in an increasingly digital marketplace.

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