The Changing Landscape of Multifamily Renters
Multifamily housing leaders at the Crittenden Multifamily Housing conference in Dallas in March said the changing landscape of apartment housing in recent years is pushing developers and operators to be more resourceful in how they provide housing and appeal to renters in the city core.
At the heart is creating compatible living spaces for Baby Boomers and Millennials under the same roof, while managing restricted spaces and rising construction costs.
Multiple-story apartments reshaping Dallas’ urban core
Much has changed in urban infill building for Dallas-based StreetLights Residential since the company built its first high-rise, The Taylor, in the city’s Uptown area in 2012. Shrinking availability of larger sites has steered the company to more high-rise projects in Dallas and other markets.
“There are very few sites in this market you can find for two or three acres,” said Tom Bakewell, President of Development. “You end up with a site that’s an acre-and-a-half or an acre, there’s really nothing to do but go up if you’re going to make the numbers work and gain efficiency on the site.”
Since the company opened The Taylor, a 17-story tower with 308 luxury apartment homes, construction costs have vaulted upward. Higher labor and materials costs, and even worker availability in Texas, are boosting square footage prices. He doesn’t expect that materials prices will come down soon, either.
However, the company continues to focus on upscale high-rise projects because of the demand. In early March, StreetLights Residential’s latest Dallas high-rise project, the 212-unit The Jordan, opened with 25 percent of the building pre-leased. It’s just one of a number of multi-story apartment buildings that are reshaping Dallas’ urban core.
“I went back and looked at the high-rises built over the years – before 2000 there were only a handful of high-rises,” Bakewell said. “The next segment in 2008, there were another three or four high-rises. With this last wave, we’ve built more than we built the previous 20 years combined.”
Baby Boomers, Millennials seeking similar digs
Because Baby Boomers and Millennials are seeking similar housing spaces and designs, the demographics for upscale high-rise living is much different than many may expect.
Floorplans are growing to accommodate younger renters who are waiting until later in life to make home purchases and older renters want extra space similar to what they may have had before downsizing from a house.
The Jordan, with an average unit size of 1,150 square feet, is a larger, more sophisticated development than its neighbor, The Taylor, which averages about 850 square feet per apartment. The extra space, in addition to high-quality finishes and amenities, have attracted high-earning Millennials and Baby Boomers who seek or want to maintain luxury living.
“We tried to tailor (The Jordan) to a little bit higher demographic, a little bit more refined than The Taylor,” Bakewell said. “We are seeing a different age demographic. I’d say the average of that demographic there is probably late 30s. Lots of empty nesters renting there, predominantly Uptown professionals.”
Operations don’t have to be compromised
The mix of Millennials and Baby Boomers are challenging developers to get more creative in how not only unit size but common areas and amenities are incorporated.
Bakewell says thirty-somethings are choosing to rent longer and are requiring larger one- and two-bedroom apartments as families grow and work demands vary.
“The other phenomenon we see now, and I think it will continue, is more and more people are working out of their apartment, starting their own business or working for a company that doesn’t have an office (here),” he said.
Because the demographics are so similar, and even though each may have different tastes, operations don’t have to be compromised to meet specific needs of younger and older renters. Margette Hepfner, Senior Vice President Client Services at Lincoln Property Co., said the wider range in ages of Millennials and Baby Boomers seems narrower because the demographics tend to cohabitate nicely.
“So far Millennials and empty nesters are mixing fairly well” she said. “You might think that empty nesters living next door to fraternity kids could cause lease terminations, however that hasn’t been the case.”
Creating common areas that appeal to multiple generations
Hepfner says developers should realize that although the generations can coexist nicely that their tastes are different and asset design should reflect that. The key is creating common areas that are appealing to a wider range of age groups.
“What we’re really seeing and what we need to hone in on are the common areas,” she said. “How do you make space usable and comfortable for various demographics to utilize at the same time? More and more residents working from home are utilizing common areas throughout the property as a home office, not just the business center.”
For example, Hepfner says creating a social setting around something like a golf simulator can better engage a broader swath of residents. Having a coffee bar nearby would attract residents, as well as create a landing spot for participants, rather than have the simulator in a room by itself.
Also, wiring for the future is an important consideration, she added, especially in high-rise construction that presents connectivity obstacles because of its concrete design. Lincoln is consulting with clients who are developing and looking at its own properties to create a better environment with reliable connectivity.
“In this day and age, being connected at all times is crucial, especially to Millennials,” Hepfner said. “Residents will truly move out – they don’t have landlines anymore – if they can’t get adequate cell service, adequate Wi-Fi, internet, cable, etc. in their units. All of those things are extremely important within the unit in addition to your common areas.”
Longer stays in rental market by Millennials good for business
Bakewell says that as Millennials continue to set more roots and empty nesters seek living in city centers, high-rise apartments will continue to shift from the smaller sizes.
“It’s great for multifamily as a whole,” Hepfner said. “It’s definitely one of the reasons that we continue to see demand where it is. The renter demographics are shifting; everyone isn’t moving into a house at 32. We’re seeing them wait until 40 or even older. The shift seems to be having a positive impact on the industry; I don’t really see it trending the other direction.”