Multifamily’s Newest Challenge? Gen Z

Understanding Gen Z: A Demographic Coming of Age

Gen Z is the first generation to grow up entirely in the digital age, with technology at their fingertips from a young age. As of 2023, the older segment of Gen Z, those aged 18 to 26, is entering the housing market, bringing with them distinct preferences that are reshaping investorstrategies. They're known for their financial savvy, with a survey indicating that 62% of Gen Z aresaving monthly, and about 30% are actively investing, showcasing their early commitment to financial stability.

Investing in Suburban Growth with a Tech Twist

Investors take note: Gen Z is sparking a suburban revival. They're looking for affordability, which is crucial as 68% of young adults prioritize saving money. Suburban multifamily properties that offer a blend of reasonable living costs and high-tech amenities are in demand. By investing in properties that provide the best of both worlds, investors can tap into the 80% of Gen Z who find suburban living appealing due to its balance of space, cost, and connectivity.

Single-Family Rentals: A Lucrative Niche

Single-family rentals (SFRs) are becoming increasingly popular among Gen Z renters, with the market expanding by 30% in the last decade. This shift is significant for investors: Gen Z's preference for the privacy and space of a home, coupled with the flexibility of renting, is creating a robust market for SFR investments.

Digital Amenities: Non-Negotiable for Gen Z Tenants

For Gen Z, digital amenities are non-negotiable. A staggering 93% of this demographic considersa reliable internet connection as essential as water and electricity. Smart home features are not just 'nice to have' but expected. Investors should prioritize these tech amenities to attract Gen Z tenants, who are willing to pay a premium for these modern conveniences.

A staggering 93% of this demographic considers a reliable internet connectionas essential as water and electricity.

Community and Wellness: More Than Just Buzzwords

Community and wellness are more than just buzzwords for Gen Z—they're a lifestyle. With 75% of Gen Z using fitness apps and 50% considering mental health as important as physical health, multifamily properties with wellness centers, gyms, and social spaces are highly attractive. Investments in these communal amenities can lead to higher tenant satisfaction and retention rates.

Pet-Friendly Properties: The Emotional Investment

Pets are more than animals to Gen Z—they're family. Properties that offer pet-friendly amenities can see a 20% increase in tenant interest. For investors, this means considering pet parks, grooming stations, and pet-friendly policies as essential features for new multifamily developments.

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E-Commerce and Package Management: The New TenantPerk

With 85% of Gen Z preferring online shopping, secure package management systems are a must-have amenity. Properties that offer smart package solutions can stand out in the market, providing a secure and convenient service that Gen Z tenants value.

Sustainable Living: An Investment in the Future

Sustainability is a significant concern for Gen Z, with 73% willing to pay extra for sustainable products. Investors can attract this eco-conscious demographic by focusing on energy-efficient appliances and green building practices, which not only appeal to tenants but also can lead to long-term cost savings and potential tax benefits.

Key Takeaways:

• Gen Z is a tech-savvy generation with distinct housing preferences. They are financiallysavvy and value affordability, space, and connectivity. Investors can tap into this marketby investing in suburban multifamily properties with reasonable living costs and high-tech amenities.
• Single-family rentals (SFRs) are becoming increasingly popular among Gen Z renters.Investors can consider investing in SFRs to cater to this growing demand.
• Digital amenities are non-negotiable for Gen Z tenants. Investors should prioritize techamenities such as reliable internet connection and smart home features to attract andretain Gen Z tenants.
• Community and wellness are important to Gen Z. Investors can consider investing inmultifamily properties with wellness centers, gyms, and social spaces to appeal to thisgeneration of renters.

Final Thoughts: Adapting to Gen Z's Housing Preferences

As Gen Z becomes a larger part of the rental market, their preferences are setting new standards for multifamily living and investment. Investors who adapt to these preferences will not only attract this emerging demographic but also set themselves up for success in a rapidly evolving market. By focusing on technology, sustainability, and community, multifamily properties can appeal to Gen Z's values and lifestyle, ensuring a solid investment with a vision for the future.

As always, Be Bold, Be great, and Keep Pushing Forward!

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Sources:

The Washington Post

Arbor Realty Trust

Homebase

Rent Café

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About Ellie Perlman

Ellie Perlman is the founder of Blue Lake Capital, a commercial real estate investment firm specializing in multifamily investing throughout the United States. At Blue Lake Capital, Ellie partners with both institutional and individual investors to grow their wealth by achieving double-digit returns by investing alongside her in exclusive multifamily deals they usually don't have access to.

A defining factor of Blue Lake Capital’s strategy is founded in utilizing machine learning/artificialintelligence throughout the course of all acquisitions and asset management. This advanced technology enables the company to produce accurate and data-driven forecasting for all assets on a market, property, and even tenant basis. In doing so, Blue Lake is able to lead commercial investments with the full capabilities of today’s technology.

Ellie is the founding host of REady2Scale , a podcast that highlights the assets, processes, andstrategies for the multiple approaches to successful real estate investing.

She started her career as a commercial real estate lawyer, leading real estate transactions for one of Israel’s leading development companies. Later, as a property manager for Israel’s largest energy company, she oversaw properties worth over $100MM. Additionally, Ellie is an experienced entrepreneur who helped build and scale companies by improving their business operations.

Ellie holds a Masters in Law from Bar-Ilan University in Israel and an MBA from MIT SloanSchool of Management.

You can read more about Blue Lake Capital and Ellie Perlman at www.bluelake-capital.com .