Boomers, Millennials Driving Growth in Luxury Rental Segment
In its Emerging Trends in Real Estate report for 2017, the Urban Land Institute points to a “de-emphasis on ownership reflected in a soaring demand for rental units,” with the Millennial and Boomer/Empty Nester cohorts leading the way. According to the study, “more than half of the 12.5 million net new households created in the next decade will rent, including those who have never owned and those making the switch from owning to renting as they age.”
What is driving the Millennials and Boomer/Empty Nesters into the high-end luxury apartment rental market?
- With roughly 10,000 exiting the workforce each day between now and the end of the next decade, Baby Boomers are retiring at the highest rate in history. They are shedding their homes and renting by choice—“Altering the American Dream,” says the Chicago Tribune, explaining, “(Boomers) are aspiring to live like urban Millennials—in rental buildings full of amenities and free of lawn mowing, shoveling, mortgages and property taxes.”
- Newer to the housing market are Millennials, the 18- to 34-year-olds who have surpassed Baby Boomers as the nation’s largest living generation. While, in the 1980s and 90s, this segment considered rental a short-term option before purchasing a house, today’s Millennials see rental as a lifestyle that travels well as their careers move them from city to city (and while they pay off student debt). They plan to rent for longer periods of time and expect high-end finishes and amenities. Projections indicate 18- to 27-year-olds alone will create 14 million households by 2025.
Where are they moving?
Much of multifamily housing is being built in the “smile states”—from Washington, D.C., to Texas to Southern California. Where you see population growth, you’ll see increased need for luxury rental.
For Millennials, as their career goes, so do they, and they are moving to cities where job growth is robust. A good case in point is Charlotte, N.C., and its surrounding counties, where about 47 percent of households are in rentals and 109 new people are added to the region’s population each day—that’s enough to fill half a 200- to 250-unit apartment complex each day. Charlotte’s Uptown/South End was recently ranked the country’s top market for apartment construction and yet the Greater Charlotte area still has a rental housing deficit.
Boomers are attracted to quaint, smaller towns big enough to offer the “quality of life” cultural amenities and recreational opportunities high on their checklist. Lexington, KY, for example, offers vibrant, big city living without the traffic; a stunning horse farm-laden rural countryside to explore; relatively low taxes; great health care; and a college (University of Kentucky) to attend free of charge.
Tracking housing trends, meeting growing space needs
Rooted in the Midwest, Miller-Valentine Group is a developer that has expanded into new markets to better serve Boomers’ and Millennials’ growing appetite for rental space. They have opened offices in Charlotte, Charleston and Columbia, South Carolina, and Dallas, Texas—metro areas into which these renter populations are migrating.
These are the four luxury communities they currently have under construction:
- Beckett Farms in Fort Mill, SC, offers a top school district and growing employment opportunities in a suburban location. “Farmhouse chic” in design, tenants will be largely young families, couples, and some retirees.
- WaterStone at Hamburg Place in Lexington, KY, is a rare urban density development for a suburban location attractive to both Millennials and Boomers.
- WaterStone at Carriage Trails in Huber Heights, OH, in the heart of a prestigious master-planned community, will attract working families with its good schools, nearby major employer Wright-Patterson Air Force Base and upscale apartments.
- Waterford at Sugarcreek in Sugarcreek Township, OH, will feature luxury garden-style apartments designed in the “big house” concept, which will give each apartment the appearance of a single-family home—an upscale, amenity-rich community that will appeal to both Millennials and empty-nesters.
In each case, these communities have been designed with local wants and needs in mind, with careful planning to create rental units for both Baby Boomers/Empty Nesters and Millennials.
For each new person who moves to a city like Charleston, Charlotte or Dallas the home they need didn’t exist yesterday. This simple fact will continue to fuel demand for the luxury rental apartments they prefer.
For more information, contact Charles Rulick at 877.684.7687.