The wait is over! View the November 2023 Rentsync National Rental Demand Report.
Throughout the pandemic, the most apparent and urgent trends that the real estate industry had to consider was online leasing and ensuring operations could continue despite a reduced physical presence. However, the longer-lasting and likely more apparent changes we are likely to see are related to what is now motivating renters to make housing decisions.
This doesn't mean what virtual leasing tools or signage work best, rather what criteria, or "checkboxes," renters have when choosing a new apartment home. We often determine the demands a renter will have based on their age, family status, and location. Assuming that anyone falling into a specific category will have one set of housing requirements, however, this is slowly changing.
Many of those who worked from home throughout the pandemic had the opportunity to reevaluate what was important to their lifestyle. Some ultimately sided with family and convenience, tipping the scales of a work/life balance further in the direction of life. Others were exposed to the limitations of their current homes. Although a return to the office looks to be in the books for many, others are likely to continue with a hybrid work model, or remain completely remote, meaning that changes in renting preferences are likely to persist if associated with working from home. Additionally, there is a reduced need for renters to be located close to urban centres, which is unlikely to go away any time soon.
Of course, this doesn't mean that the downtown is dead, or that urban living will become a thing of the past, it simply reflects the general trends being experienced not just in individual markets, but across the country, and much of the developed world.
The changes in renter behaviour, which are immediately visible, are mostly related to location and layout, and material components of housing. Discussed in greater detail within many of our demand reports released over the last year there has been a general shift in many renters on where they are willing to live. It was typically accepted that young renters preferred living in major markets and that as you progressed down the age range there was a greater willingness to live in smaller communities. We're seeing a shift away from this. Without the need to live close to work, due to the obligation of a daily commute, more people are moving further away and taking advantage of the benefits of a smaller community. Whether that's a lower cost of living, more affordable rent, or larger units; all of these factors become much more real without the need to be at the office each day.
Space is another important factor; whether simply having more of it or a greater variety of spaces. Being cooped up within the same four walls, 24 hours a day, can't possibly be healthy, and renters are beginning to recognize that. This has led many younger households to move away from smaller studio, bachelor, and 1-bed suites in favour of larger 2 and 3-bedroom units. Similarly, more families are moving towards single-family home rentals instead of apartments due to the value of having more space to live in. With growing children comes a growing need for space, as well as the additional demand for outdoor areas, neither of which are readily available in apartments. This factor in combination with rising real estate prices resulted in many families who would have otherwise upgraded their homes to single family rentals which experienced explosive growth throughout 2020 and 2021. These properties offered families all the interior and exterior space they could possibly want when raising children and growing their families
Along with the push for larger units with multiple bedrooms, there is a greater focus on the specific ways that a space can be used. Working from a bedroom, or living room can get old fast; especially when living with others. Having a dedicated workspace can help not only minimize distractions but ensure that at the end of the day a person can properly relax and unwind without the constant reminder of their work being only steps away. Although many properties tout the benefits of their open dens within a unit, the benefits offered by a fully enclosed space whether that be a dedicated office space, or a second bedroom are far greater. This trend is likely going to have the greatest impact on properties moving forward as it is directly related to the structural layout of a building and can't be easily resolved in order to improve leasing.
Unit features and finishes used to be those parts of a unit that might help set it apart from the competition or maybe draw in more tenants, but with the ever-growing amount of time being spent indoors many now see the added convenience of in-suite laundry and a dishwasher as a necessity. While spending all day in sweatpants and a button-down aren't likely to create any more laundry, eating 3 meals a day at home can certainly add up when it comes time to clean. These features aren't just limited to nicer appliances, but also include:
A lot of these features are standard in most new stock rental buildings but are becoming an increasingly more common requirement for many renters looking for new rental accommodations.
Renters are looking for spaces which won't feel stifling or cramped when at home all day, but instead will make their lives easier and more convenient.
Although we've discussed in great detail some of the ongoing changes to what renters want when searching for new homes; the long-term shifts in how a space is used and the amount of time spent at home will likely persist how we see the spaces around us.
Thoughtful design and larger units will only become a greater focus for those working from home. Being home all day drives many to create defined spaces and segment their homes, as no one wants to be surrounded by the same 4 white walls while going through their daily motions. Whether this involves simply designing larger units, or using some of the more creative approaches to dividing up space such as Ori Livings Pocket Studio, or Ikea's ROGNAN. Renters don't want a one size fits all solution for their living space and instead want more defined spaces which can include:
All of these spaces are used on a daily basis and if not done right can negatively impact a resident's mental health as well as disincentivize them from leasing a unit.
Although already being felt by a renter's wallet, the greater amount of time being spent at home during working hours means greater electricity usage, with much of it being during peak hours. This results in higher individual utility bills at a household level. With time, there's likely to be a greater focus on the need to reduce energy consumption at the household level whether by using more energy-efficient electronics or through the introduction of green design.
As renters continue to spend more time at home they will begin to recognize the flaws in their current environment which over time will promote further change in not just what their demands are, but what the industry offers them too.
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