Multifamily Meets Gen Z

Castle Lanterra Founder & CEO Elie Rieder weighs in on how Gen Z is reshaping the rental market in this Multi-Housing News exclusive:

Gen Z represents around 21 percent of the U.S. population, or more than 65.5 million people, as RentCafe notes. But according to the U.S. Census Bureau, most of these young adults are starting a family and establishing stable careers later in life than previous generations. When they do move out of their parents’ homes, Gen Z is renting apartments. Gen Z adults stand out with distinctive attitudes that influence their views of housing, finance and communication.

They are the first cohort that has never known a world without the internet. During their formative years, they experienced a pandemic and lived through a period of intense inflationary stress. These events have produced financially cautious, risk-averse young people. RentCafe research reveals that 54 percent of Gen Z already have investments in their names. Still, they are slower to move out of their parents’ homes even when they can afford it. That’s large- ly because they want to live comfortably when they do leave the nest.

There’s a good chance they’ll be shopping for that apartment on YouTube. According to RentCafe, 47 percent of this generation uses the platform to research products before purchasing them. According to the Harvard Joint Center for Housing Studies’ 2024 report on the nation’s rental housing, Gen Z members “are driving rental demand.” By 2022, these renters headed 7.9 million households. In contrast, Millennials’ homeownership rate ticked up 9 percent between 2019 and 2022, as their renter households declined by nearly 800,000.

“Generation Z is on the cusp of reshaping the rental market as they leave the nest in increasing numbers,” said Tres Seippel, director of construction management at Arbor Realty Trust. “It is the only generation adding rental households, while the number of Millennial renters has already peaked. As the first digital natives, Gen Z is poised to become the most influential demographic group in the multifamily rental market.” (See “Top Digital Features Gen Zers Want in Their Apartments.”)

Forty-three percent of Gen Z renters surveyed said that one of the biggest benefits of renting is not having to make a long-term commitment, according to the National Multifamily Housing Council/Grace Hill 2024 Renter Preferences Survey. Forty-two percent said they appreciate maintenance-free living. As Gen Z enters the multifamily market, it is bringing new demands for tech-savvy solutions, sustainability and a strong focus on health and wellness.

“This generation values digital convenience, eco-friendly living and vibrant community spaces that promote both social connections and personal well-being. For property management, adapting to these shifts is crucial,” said Shane Robinson, senior vice president of asset management at Cityview. Offering seamless online payments, wellness-focused amenities and spaces that foster community interaction is essential to meet Gen Z’s expectations.

Valuing flexibility Gen Z renters also display distinct generational preferences for how they take care of business. “The idea of writing out an old-fashioned check is foreign to most of them—they expect a seamless, tech-driven process for handling their finances, ” added Robinson. Payment flexibility is key for Gen Z, so providing renters with multiple options is the best way to meet their expectations. That distinction is borne out by the 2024 NMHC/Grace Hill Renter Preferences Survey. The study reveals that the favorite rental payment methods for residents 27 and younger are “credit card without convenience fee” and “debit card without convenience fee,” each cited by about 32 percent of respondents. ACH bank transfers are a distant third at 15 percent.

Student housing operators have an excellent opportunity to observe Gen Z residents as they make the transition into young adulthood. “Gen Z has grown up entirely immersed in the digital world,” observed Rob Dinwiddie, executive vice president for marketing and management services at Landmark Properties. “‘To compete for their business, it’s imperative to offer seamless online experiences across the entire renter journey, from discovery and application to lease signing and resident engagement.” A robust social media presence, interactive virtual tours and user-friendly online payment platforms are musts.

Gen Z renters lean heavily toward digital payment methods that offer convenience and speed. Mobile payment apps, peer-to-peer payment platforms and cred- it cards with rewards programs are their go-to options. “The near 95 percent online payment rate we see in student housing underscores their aversion to traditional methods like checks,” said Dinwiddie. Other student housing providers report similar trends. “We require online payments through our resident portal via ACH or credit cards except where checks must be accepted by state regulation,” reported Kimmy Kelley, chief marketing officer with American Campus Communities.

Market-rate operators can also glean ideas from student housing amenities and initiatives that promote convenience, social connection and well-ness. American Campus Communities is seeing a decline in the number of prospective residents taking in-person tours. The new focus is on virtual ways of connecting with current and future residents. “We are committed to quick customer response times via online chats, social media and email while continu- ing to have plenty of in-person activities and events through our residence life program,” said Kelley.

Generational values

Beyond their digital fluency, Gen Z is a purpose- driven cohort that values diversity, inclusion and social impact, experts say. Gen Z appreciates brands that align with their values. Engaging them on social media with authentic content and fostering a sense of community at properties can strengthen loyalty and raise the chances of retaining these residents. Kelley said, “According to a recent survey of our American Campus Communities’ residents, 71 percent said it was ‘very important’ or ‘import-ant’ for their student housing community to have environmentally sustainable features.” To help alleviate anxiety about climate change, American Campus Communities’ “For the Greener Good” peer-to-peer education campaign provided tips on how to adopt a conservation mindset and form habits that reduce environmental impact.

Additionally, the nation’s mental health crisis is hitting young people especially hard. As Ameri- can Campus Communities’ Kelley noted, 75 per-cent of mental health issues begin by age 24, and 64 percent of college dropouts leave due to a mental-health-related reason. As reported in Multi-Housing News, a 2023 study of more than 18,000 college students showed that 70 percent of respondents often or always felt stressed out, 63 percent were anxious or worried, and 61 percent felt overwhelmed.

These feelings can contribute to a negative experience at school and in the years directly following graduation—a period coinciding with the time when Gen Z is likely to be living in market-rate apartments. More than ever, student housing operators are collaborating with public-service campaigns and programs to support mental health and wellness for better outcomes during college, after graduation and beyond.

Leaving the nest

Like all generations, Gen Z college students face a big decision at graduation about next steps. New graduates are moving back home to live with parents and enter the local workforce at a higher rate than earlier generations, though many do still seek career and social opportunities in new locations. Those issues came to light during a discussion with students at the Urban Land Institute’s 2023 Spring Meeting. “Suburbs cannot thrive if they lack connection to vibrant urban areas,” noted Anita Kramer, senior vice president at ULI’s Center for Real Estate Economics and Capital Markets and the discussion’s moderator. Family ties are also a big concern. More than other generations, participating students expressed a desire to live where their families are. In addition, they said they would like to pick a city where they could make a positive impact on the community.

“Social and physical job requirements were also identified as potential limitations to career choices, as specific industries might be more concentrated in certain cities,” noted Jami Pasquinelli, a senior manager at ULI University Connections, in a report on the session. “Finally, intentional placemaking emerged as a key consideration, reflecting a desire for cities that prioritize creating vibrant and inclusive spaces.”

According to an analysis of 2022 U.S. Census Bureau data by RentCafe, Madison, Wis., had the largest share of Gen Z renters, with 28.2 percent. Rounding out the top five were Lubbock, Texas (27.2 percent); Lincoln, Neb. (23.7 percent); Lexington-Fayette, Ky. (20.4 percent); and Tucson, Ariz. (19.8 percent).

Resident wish list

Most Gen Zers spend less than $1,500 on monthly rent, according to research by RentCafe. A 2022 survey conducted by the firm found that most Gen Z renters (71 percent) wanted a washer/dryer in their unit. For the apartment community, the most desired amenity was parking (60 percent),followed closely by high-speed internet (57 per- cent). Eighty-four percent of respondents agreed that the apartment’s rental price was the most important factor for them, while the neighborhood was chosen by 47 percent of respondents. (See “Monthly Amount Gen Zers Spend on Rent.”)

In suburban and urban apartment communities alike, amenities with Gen Z appeal range from EV charging stations and fitness centers to dog parks, noted Castle Lanterra founder & CEO Elie Rieder. “Gen Z is looking for guaranteed parking spaces, good walkability scores, with shopping, entertainment and dining nearby,” he added. “They also want secure and easily accessible package solutions.”

In apartments, Gen Z residents prefer open-concept living with high-end finishes, balconies, in-unit washer/dryers, space for home offices and smart- home technology. Like other generations, Gen Z residents are price-conscious renters. “Feedback from the sites is that renters are shopping many more deals to price out rental concessions before pulling the trigger on their living situation,” noted Rieder. “This dynamic is especially true in markets experiencing significant increases in supply, as new developments offer large concessions, putting pressure on the market to offer concessions to compete for the same prospects.”

Gen Z renters are especially drawn to eco-friendly properties that boast green certifications and energy-efficient features, ensuring their lifestyle aligns with their commitment to the planet. They value properties that offer a variety of social spaces and organized events that make it easy to meet neighbors and create a real community vibe. “They also place high value on physical and mental health,” said Robinson. They seek out environments that support a healthy lifestyle with access to fitness centers, wellness amenities like yoga studios, mental health resources and outdoor spaces for exercise.

At Castle Lanterra apartment communities, all leasing and resident processes need to be digital and smartphone-compatible for Gen Z. Resident apps and text communication seem to be their preferred means of communication. Castle Lanterra recently began participating in the Bilt Rewards program, which gives residents reward points for every rent payment. “This has been particularly popular with Gen Z residents, who also get free credit reporting to all three bureaus with every rent payment to help build credit history,” said Rieder.

What’s on the horizon

There is already buzz about how Gen Z consumer preferences might evolve as they mature. While their core values—such as sustainability, community and digital convenience—are expected to stay strong, we’re likely to see some shifts.

“As they move further into their careers and start building more financial stability, we might see Gen Z becoming even more discerning about where they spend their money,” noted Robinson. There’s talk that their focus on affordability might shift slightly toward a willingness to invest in higher-quality, longer-lasting products and experiences, especially if those align with their values of sustainability and ethical production.

And Gen Z’s housing needs will undoubtedly evolve in the decades to come. The key for multifamily investors will be to stay attuned to these shifts and continue to offer flexible, community-driven and eco-conscious options that can grow with this generation as their lives and priorities change.