For the past few years, the importance of appealing to millennial renters has dominated the conversation. But, based on recent trends, the industry should really start honing their focus on baby boomers. From being the fastest-growing tenant profile to experiencing less rent burden to staying in one place for longer than other demographics, baby boomers are the ideal tenant in today’s luxury multifamily space.
Largest Growing Tenant Profile
On a national level, between 2009 and 2015, the biggest changes in the renting population came from those aged 55 and older (up by 28%), compared to only a 3% increase in renters 34 or younger. And by according to a survey by Freddie Mac, by 2020, more than 5 million baby boomers are expected to rent their next home. A baby boomer renter is close to retirement or is retired; wants to live in the city, closer to their children and grandchildren; is downsizing from a suburban McMansion and wants service-based amenities. How would I know? I largely fit that profile. I recently sold my home to move into a luxury apartment building. As I mentioned in my previous article, liquidity, flexibility and lifestyle are important features for this renter profile. The right amenities for my age bracket are service-based, such as concierge services and package delivery.
Less Rent Burdened
Luxury apartment buildings may be overlooking the net worth of retired baby boomer renters. Rent burdenship — the percentage of income a renter spends on his or her rent — has a strong correlation to a renter’s overall income. High-income owners tend to spend a lower percentage of income on rent than lower-income owners. A renter is said to be “rent burdened” if he or she spends 30% or more of his or her income on rent. This metric can illuminate what socioeconomic groups will fill today’s luxury apartments. It seems almost too obvious that baby boomers have higher net worth than millennials, yet the assumption is that they are not renting.
Low Rates Of Turnover
Baby boomers are much less likely than millennials to move once they’ve found a place to live. Factors such as finding a new job, having a child and other changes in lifestyle are major causes for people to seek a new place to rent. Baby boomers aren’t likely to start new jobs, nor are they likely to dramatically change lifestyles. And they’re not looking for month-to-month leases — they’re more likely to stay once they find a place they love. According to Freddie Mac’s research, “very important” factors influencing a baby boomer’s next move include neighborhood walkability and community amenities that mean they are no longer responsible for caring for the property.
So how do multifamily developers make their case to baby boomers? The first part is amenities. Older renters love an amenity package that makes life easier and caters to service. These in-unit amenities provide convenience for former homeowners who don’t want to deal with the hassle anymore. Baby boomer renters want a unit maintained for them while they travel: they want their pets watched, they want their plants watered, they want their groceries delivered. So, buildings that provide these services will have an easier time attracting the boomer demographic.
Another attractive aspect for baby boomers is the transit-oriented development (TOD) status of a building. Traveling easily is important to these renters. In urban areas, TOD refers to ease of transit. TOD buildings are near public transit, like bus stops and commuter rail lines. In the suburbs, TOD refers more to nearby retail. TOD apartments are near restaurants and shopping centers, enabling baby boomers to stay close to home while getting their essentials. These apartments are also near highways, granting access to the surrounding area and making it easy to travel to family and friends.
Baby boomers may be the oldest generation that’s renting en masse, but they’re a bloc that should not be forgotten by multifamily developers. These renters are looking for a sense of community paired with amenities that meet all their needs. Developers would be remiss to ignore this generation of high-earning, low-rent-burdened renters.