2021 Multifamily Trends to Know - UTAH VERSION
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2021 Multifamily
Trends to Know
UTAH VERSION
BY MAT T GNEITING | DECEMBER 2020
MULTIFAMILY
TRENDS TO KNOW
BY MATT GNEITING
THE YEAR OF THE ROLLERCOASTER, that’s what I’m going to call it. Rollercoasters are identified
typically as fun, something you want to pay to do. 2020 has been no different. It really hasn’t been
fun if I’m honest, but a positive attitude requires an uplifting response and so we’ll call it fun. I feel
better that way. Besides, challenge can be fun and this year has offered that. And true to form,
like any rollercoaster ride, we’ve paid for this one too. For some, the price has been higher than
others. 2020 has presented new opportunities and accelerated the pace of many trends while
demanding significant change and adjustment. But looking forward, what’s on the horizon? And
what can we see for tomorrow’s multifamily landscape? I’ve identified a number of key trends
that are more important now to renters than ever that you’ll want to know about. Understanding
and taking advantage of these will help improve your success now and through 2021. You’ll have
to sort through the concepts and decide which ones will be most advantageous but I promise,
these principles work and the data shows it.
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A TENANT’S FFF
Want to increase tenant longevity? Prospec-
tive tenants are increasingly inclined to lease
pet friendly residences. Blah, blah blah. Tell
you something that you didn’t know, right?
But did you know pet owners tend to lease
and stay longer than typical tenants? That
means leasing and turn over expenses will be
lower over time which is more money for you.
Tenants in pet-friendly rentals stayed an aver-
age of 46 months compared to 18 months for
tenants residing in rentals prohibiting pets. It
should be noted that the increased length of
tenancy did not occur for tenants who illegally
keep pets (that is, tenants who keep animals in
rental units that prohibit animals). Tenants who
illegally kept pets were closer in their length of
tenancy to people who do not keep pets at all.
But there’s more to this conversation. Many
landlords and property managers worry about
allowing pets into their property. One concern is
the risk of damage to units. However, multifamily
data shows that damage left from tenants isn’t
drastically different between those with pets
and those without. In fact, it’s just under $40
different. Tenants with pets cause an average of
$362 damage while tenants without pets pro-
W W W . G N E I T I N G C A P I T A L . C O M
duce an average of $323 in damage. To compare
with a traditional and a couple more accepted
tenant profile, tenants with children on average
had $150 more damage than tenants without
children. I guess that’s proof that animals are
cheaper than kids.
But how do landlords mitigate pets and im-
prove profitability? Charge both a pet deposit
and pet rent for tenants who own pets. This will
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help cover any pet damage and also add to your property’s revenue. Be sure you put your pet
policy in your rental agreements. This pet policy should be clear and comprehensive. The more
precise your pet policy, the better.
Pets are not only here to stay as part of multi-family leasing but trends show they are going to in-
crease in presence and demand. Recent multifamily data shows that more and more renters own
pets and are looking for pet-friendly rental units. Retail pet supply sales in the U.S for instance are
expected to reach a record high $99 billion in 2020, up from $95.7 billion in 2019. According to
Steve King, CEO of the American Pet Products Association (APPA), “Consumers are more educated
than ever…which means they’re willing to pay more for quality products…[These] latest industry
figures remind us of just how much Americans love their pets.” Nearly one-third of prospects in
the market own pets currently.
And what if you already have a pet-friendly community? Well, multifamily data shows that adding
pet amenities may help you increase your property’s income. Certain pet amenities like dog parks
and even contracted services like dog walking can easily attract more tenants to your availabil-
ities. Dog wash and pet spa retreats are also increasingly popular. Animal owners are willing to
pay more each month to live in communities that have these extras for their FFF’s (somewhat like
BFF’s) – their favorite furry friends.
THE VALUE OF
VIRTUAL
COVID-19 has only magnified the trend to go
online to buy, to order, to find, and to stream.
Our industry is no different with everything
from property leasing to rent paying and more.
But you have a community website. You’ve
posted some pictures of your units. Shouldn’t
that be enough? Data adds a definitive no.
Research shows that listings with virtual tours
get up to 87% more views than those without
them. Renters are looking for listings where
they can easily view a property online, and
people are more apt to rent your apartments
when they can virtually tour the apartment
first, rather than just look at pictures . That
market driver is important to address. And
if that statistic isn’t enough, think about the
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tech savvy, smart phone using Gen Zs and foot on the property. Data shows that virtual
Millennials. According to the 2018 Zillow Group tours filter out the less interested inquiries.
Consumer Housing Trends Report, 45% of Gen That means more of your property showings
Z and 41% of Millennial buyers find 3D tours will end up in signed leases. In the end, your
or recorded video of a future residence to be property managers not only save time, but
extremely important in helping them decide they can focus more effort on serious leads and
on their housing . This trend only stands to in- you fill your units faster and make more mon-
crease given these tech-savvy generations now ey. And with COVID-19, the use of virtual tours
make up one of the largest groups of potential and virtual leasing has grown exponentially in
renters. According to local Salt Lake City virtual the past few months and the trend is only ex-
tour pros, Covert Labs, providing one of their pected to grow even as the health crisis passes.
virtual 360-degree (3D) walk-through tours
will generate higher engagement & interest To record a virtual tour, one of the first things
quickly. Multiple benefits come through their you should do is get a professional 3D services
services including finding tenants faster and at partner, or a good camera. A low-quality virtual
higher rental rates. tour won’t give potential renters a very good
impression of your property. You only have one
Virtual tours offer benefits for property manag- chance to make a good first impression. Con-
ers which help you as the owner. For example, tact Covert Labs, thecovertlabs.com/3d-scans,
interested renters can view your available apart- mention this article, and get preferred pricing
ments on their own time from the comfort of on your virtual 360-degree (3D) walk-throughs
their couch. This means your property manag- of your property. Virtual tours work.
ers can devote less time to in-person tours and
renters can save time by touring apartments
that truly suit their needs before they ever set
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OPTIONS, OPTIONS, service to offer these amenities to your tenants.
This may increase your occupancy rates and
& AMENITIES your property’s income. Some complex owners
As you know, amenities have a large impact in are providing dog parks nestled in the comfort
attracting tenants and increasing occupancy of the parking garage, out of the heat and the
rates. While we know this, many apartment cold.
complexes and their owners are hung up on
Consider the Amazon effect. More and more
outdated and often unused amenities to draw
people are ordering items online and having
in new tenants. If that’s you, don’t worry, there
them shipped to their apartments. Knowing
is hope. There are many amenities owners can
that their packages are secure and that they
add to provide more punch and profitability to
can conveniently pick up their items can easily
their complex. Here’s a few. And as you consider
attract more tenants to your property. Many
these, keep in mind that you want to sprinkle
apartment communities are adding package
the amenities throughout the property. Create
lockers to their list of available amenities.
multiple points of interest in your community
for your tenants.
If you haven’t already taken the tech approach
to communicating with your renters, now may
For example, busy tenants might not use on-
be the time? More and more people are look-
site dog parks and gyms, but they may love
ing for quick, easy access to information on
amenities that reduce chores. Consider part-
their smart phones. Consider having a website
nering with a dog walking company or a maid
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or mobile application where your tenants can essence, community is the new amenity. Com-
check for updates, pay rent, reserve amenities, mon areas are evolving into working, gaming,
and receive package notifications. This makes and music rooms available to residents and
communication easy, which is at the forefront their guests for single person to small group
of many renters’ minds, and will lessen the use. Gone are the large, sterile grand halls and
need for your property manager to be involved oversized rooms of the clubhouse. Many com-
in administrative details and more involved munities now offer communal workspaces for
with sales and leasing. residents, where residents can work remotely
just for the day or have dedicated workspaces.
And how about those Millennials? The National And in the COVID-19 environment, this is all the
Association of Home Builders (NAHB) notes that more important. While some apartments offer
22% of adults between the ages of 25 and 34 still informal co-working spaces (not unlike hotel
live at home. That’s a market of over 8.7 million lobbies), others are outfitted with formal spac-
potential new renters, according to the Kaiser es, complete with silent areas and meeting
Family Foundation and the Census Bureau. In rooms with full conference technology.
order to attract and retain these “renters-by-
choice,” developers are creating multifamily
communities with more life-style amenities
such as on-site coffee bars, rooftop cafes, bars,
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and indoor basketball and bowling. Brian McAu-
liffe, President, CBRE Capital Markets, shares
in the company publication Amenities for the
2020s, “Multifamily amenity innovation is crit-
ical to the success and competitive advantage
of apartment properties. It’s not enough to offer
rooftop grilling areas or dog runs; owners and
developers must think carefully about ameni-
ties and services that work together to create a
cohesive community.”
If your community isn’t large enough to sup-
port some of these higher dollar amenities,
you need to think harder and work smarter.
Go social. Referred by some as the “Cheers”
effect, renters are searching for connection
where everybody knows your name but where
the renter controls the process of who meets
who. It’s social connecting 2020 style. Having
authentic social connections are rising in a
renters’ priorities for rental communities. In
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COVID-19, LIFESTYLE, which is driving population, housing growth,
and the rental market. And as you would imag-
AND THE BURBS ine, fundamentals such as vacancy rates and
The coronavirus pandemic is a strong driving rent growth in secondary and tertiary markets
force pushing residents, companies and com- are stronger than those of primary markets .
mercial real estate buyers to non-metros but it’s According to the Milken Institute’s Best-Per-
not the only factor. Residents increasingly are forming Cities 2020 report, the Orem-Provo
opting for secondary and tertiary markets over metro makes the #2 ranking of Best-Perform-
gateway cities and primary markets with com- ing Large Cities with Salt Lake tied for 25th.
panies and investors following suit. This is good You’ll find Logan and St. George in the #3 and
news for Utah. Secondary and tertiary cities are #4 positions respectively on the Best-Perform-
boasting population growth and big company ing Small Cities list of the same study . Utah is
relocations. We feel this trend in Utah directly. running on all economic cylinders and it shows.
Recent market analysis by the Kem C. Gardner
But there is more to spreading out than just
Policy Institute shows that Utah’s population
to secondary and tertiary markets. Where are
rose 18.4% over the past decade with Utah Coun-
the people flocking inside those markets? They
ty outpacing Salt Lake for the first time. There
are looking for a suburban lifestyle. CBRE’s 2021
were about 3.273 million people living in Utah
U.S. Real Estate Outlook publication shares
as of July 1, 2020, which would be an increase of
that suburban multifamily will outpace urban
509,115 people in the span of the last ten years .
properties in the recovery. CBRE foresees U.S.
We’re seeing this trend nationwide. Population
multifamily returning to pre-pandemic occu-
net migration since 2000 into secondary and
pancy levels in 2021 with rents fully recovering
tertiary markets was 70% higher than in metros
by 2022. “The economic rebound will lead
and that escalated to more than 200% higher
to rising multifamily demand, largely from
since 2014 .
‘unbundling’—certain renters moving out of
Cities with strong economies are benefiting their parents’ homes or those of friends as job
the most during this pandemic period as they opportunities provide more financial flexibil-
are also the places we find historically low un- ity to live independently,” stated the report.
employment. And where there are jobs, that’s “Demand levels in 2021 likely will fall short of
where you’re finding the most in-migration pre-COVID peaks in 2018 and 2019 but should
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rise significantly from 2020.” In secondary and To some extent, change is always a constant in
tertiary cities and especially the suburbs, fami- any market and roller coasters will always be a
lies are finding quality of life at more accessible mix of fun and fear. Preferences change over
living costs that allow them to lease a rental or time, and people come to value some things
buy a home. COVID-19 exacerbated this trend more than others. Adapting to these changing
as employees across the US who are now work- needs however is essential to the success of any
ing from home are opting for more comfort- growing or established organization including
able, affordable suburban living and the cities for multifamily ownership. Understanding these
that offer them, while leaving behind cramped elements are the very first step in preparing a
urban core apartment towers with high-end suitable response. And whether you adopt a pet
amenities that consequently and unfortunately policy (let alone a pet), engage more deeply in
are typically closed in the current environment the online virtual tours chorus, or relocate your
to stop the spread of COVID-19. It seems the investments and your money to the Burbs, the
tide has shifted and times are changing for the prospects are bright for multifamily in Utah.
foreseeable future. For some that includes the
resolve to say, “I moved to the suburbs from the
city, and I’ll never move back.”
FOR A DEEPER DIVE INTO THE INSIGHTS PROVIDED IN THIS ARTICLE,
PERUSE THESE VALUABLE SOURCES:
https://www.cbre.us/research-and-reports/Multifamily-Innovation-Watch
https://www.petfinder.com/dogs/living-with-your-dog/pet-friendly-housing-study/
https://www.businessinsider.com/i-moved-from-city-to-suburbs-why-ill-stay
https://milkeninstitute.org/reports/best-performing-cities-2020
ABOUT THE AUTHOR:
Matt Gneiting is a Principal at Gneiting Capital. He can most
often be found doing any of the following: sitting in the office,
talking on the phone, getting or being Zoomed, typing words on
a computer keyboard, or entering numbers into spreadsheets
while he regularly clicks his mouse. His life he has learned is
rather normal. 9 out of 10 survey correspondents lived the same
kind of life. Oh, and he can routinely be found wearing a white
and light blue mask in public settings. Also pretty routine he
has discovered.
CONTACT
matt@gneitingcapital.com | (385) 482-2200
www.gneitingcapital.com
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CREDITS
1
https://www.petfinder.com/dogs/living-with-your-dog/pet-friendly-housing-study/
2
https://www.petfinder.com/dogs/living-with-your-dog/pet-friendly-housing-study/
3
https://apartmentdata.com/multifamily-data-pet-policies/
4
https://www.americanpetproducts.org/press_industrytrends.asp
5
https://www.prnewswire.com/news-releases/americans-pet-spending-reaches-record-breaking-high-95-7-billion-301012852.html
6
https://apartmentdata.com/multifamily-data-research-virtual-tours/
7
http://zillow.mediaroom.com/2019-04-22-Zillow-Launches-AI-Powered-3D-Home-Tours-Across-United-States-and-Canada
8
https://www.multihousingnews.com/post/5-trends-property-investors-should-know-in-2020/
9
https://apartmentdata.com/multifamily-data-apartment-amenities/
10
https://apartmentdata.com/multifamily-data-apartment-amenities/
11
https://apartmentdata.com/multifamily-data-apartment-amenities/
https://www.worldpropertyjournal.com/real-estate-news/united-states/irvine/national-association-of-home-builders-international-builders-show-us-apartment-production-da-
12
ta-in-2020-multifamily-housing-starts-in-2020-real-estate-news-11781.php
13
https://www.cbre.us/-/media/cbre/countryunitedstates/us-research/major-reports/2019/multifamily-innovation-watch/cbre_streetsense_mfinnovationwatch_amenities.pdf
14
https://www.ksl.com/article/50060124/report-utahs-population-rose-184-over-past-decade-utah-county-outpaces-salt-lake-for-1st-time
15
https://www.globest.com/2020/07/13/forget-big-cities-as-firms-investors-set-sights-on-smaller-markets/
16
https://www.globest.com/2020/07/13/forget-big-cities-as-firms-investors-set-sights-on-smaller-markets/
17
https://milkeninstitute.org/reports/best-performing-cities-2020
18
https://www.cbre.us/about/media-center/2021-us-real-estate-outlook
19
https://www.businessinsider.com/i-moved-from-city-to-suburbs-why-ill-stay
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