by Ed Wolff
Renters are modern. They expect to be able to manage their lives from the palm of their hand, and that includes their living spaces and rental experience. Today’s renters demand flexibility and affordability. They expect options. Renters want what they want, and they want it now.
And they want it provided by their apartment community.
Location, home design and physical amenities are still factors in leasing decisions, but they no longer satisfy even baseline renter requirements. Convenience has become king. Competitive advantage is created through a property’s ability to make residents’ lives easier. And operators have been forced to adapt to meet rapidly evolving renter preferences.
“As an industry, both from a renter’s perspective and a provider’s perspective, the real deliverable was always four walls and a roof. This is where you live,” said Dave Marcinkowski, founding partner at Madera Residential. “I think what we’re seeing, spurred by technology, is that it’s now more about lifestyle.”
The COVID-19 era irreversibly altered the profile of the average renter. A heightened demand is now placed on the consolidation of services and centralized control of the leasing experience. Renters don’t want mundane tasks eating into their down time. They expect single-app systems that enable mobile management of their homes so daily tasks can be conducted remotely.
“We started to see this sentiment with the onset of the smartphone, and it has only gotten stronger,” Marcinkowski said. “As those types of opportunities have presented themselves to the resident, they want it in everything that they do. They don’t want to stand in a line or sit around and wait and do nothing anymore. This younger generation must have it now. We have the ability to potentially satisfy some of those needs.”
From online leasing platforms to insurtech solutions that replace upfront security deposits, renters are being greeted with user-friendly conveniences on the front end of the lease life cycle. AI technology is being leveraged to optimize not only lease conversion but also to offer 24-hour resident support and simplify payments and move-outs.
Renters seek flexibility, not just in their physical living spaces but in their ability to budget. They appreciate payment options that break from longstanding models. They value the freedom to tap services that create convenience in their lives, without being shackled by outdated industry practices.
“Those things used to be ‘nice to haves,’ if you could do them. Now they’re an expectation,” Marcinkowski said. “In this gig economy, people want to have the ability to have somebody walk their dog, water their plants and deliver their packages to them on demand. That on-demand piece is important.”
For years, Marcinkowski said, the hesitancy to break the mold and deploy new operational models, payment options and smart home tech stemmed from the upfront cost of deployment. However, as tech adoption rates have increased among renters, operators are experiencing greater ROI. Retrofitting existing communities with smart home tech is becoming less prohibitive. As the industry reaches a critical mass of operators deploying digital solutions and processes, he believes costs will reach a point where such proptech becomes mainstream.
“Everybody says they want to be a first-mover on these things, but when push comes to shove that’s not the case. Eventually, we’re going to see a massive push,” said Marcinkowski. “But there are ways to monetize all of this, and that is going to make adoption speed up even faster.”
In the hospitality industry, which was an early adopter of digital solutions and services, charges are now assessed for add-on services and customized options, which increases profitability. Guests are eager to pay the service fees in exchange for convenience.
“The resident or the guest is going to pay that fee because to them it’s not about cost, it’s about the convenience,” Marcinkowski said. “People even prefer convenience over choice. They want their lives to be as convenient as possible.”
Fees aren’t an issue. It’s the number of fees. Residents will feel like they’re being nickel and dimed if they receive a bill with 20 line items for add-on fees. By bundling fees for services and conveniences, Marcinkowski said operators can make the pass-through fees palatable, he said the key is to demonstrate value.
“It’s about the lens you view it through,” he said. “If we can explain to renters everything they’re getting from us, show them that they’re paying half what they would otherwise for things like internet, and contain it under one line item, that will sell. Fees for essential services are problematic, but when it’s a value-creating service for residents it makes sense.”
The subscription-based economy is here to stay, and operators need to focus on catering to renters’ demands for convenience and flexibility. Change in multifamily has always been resident driven, but operators who embrace technologies that deliver efficiencies for residents and on-site teams alike will bolster operational efficiency and ROI. The competitive balance in the industry has shifted to those companies that differentiate themselves through technology and meet renter demands for a hassle-free lifestyle.