LOS ANGELES—Millennials are still moving home after college, according to data from property management firm AppFolio. Because of the burden of high rents in major metros, millennials—some surveys say as much as 25%—are moving home after college. If the trend continues, it could impact the rental market. We sat down with Nat Kunes, VP of product at AppFolio, to find out more about the trend and ask what property owners can do to attract millennials. Here, Kunes talks about millennial rental patterns, multifamily trends aimed at millennials and how Gen Z fits into the equation.

GlobeSt.com: Why are millennials moving home after college?

Nat Kunes: It comes down to saving money. This is especially true of fresh graduates with student debt who may not even have a job lined up just yet, or have an internship that won't cover living expenses. They're also likely looking for jobs or working in metro areas, and rent prices are at all-time highs in many U.S. cities right now. Our own research found that cities like NYC, LA and Boston are at or nearing the rent-burden mark (50% or more of monthly income spent on rent). That's why moving back home with parents to the metro suburbs is an increasing trend for younger people.

GlobeSt.com: How is this affecting the apartment market and apartment demand?

Kunes: TD Ameritrade's recent Young Money Survey found 25% of Millennials plan to move back home after college. That's a big number when you think about the addressable market for apartment renters. One thing that landlords/property owners need to keep an eye on with units they typically lease to young professionals are occupancy rates. Open units could lead to steep competition with other landlords for Millennial tenants – so continued renter retention is imperative right now, as-is effectively advertising units to keep them full.

GlobeSt.com: How should developers factor this into new projects?

Kunes: Between this and other economic factors—like low interest rates and increasing home-buying—everything in the industry needs to think about diversification to minimize risk. Developers, property investors, property managers all should be thinking about how to expand their portfolio so it includes residential rentals, commercial rentals and other segments. Having this mix will help ensure if any one area starts to stall out, other revenue streams will still be in place.

Another consideration for developers and property owners is building or converting to micro-apartments. Because you can fit more of these in existing space, you can decrease rent without losing overall revenue and this is a way to attract millennial from moving out of their parents' homes.

GlobeSt.com: Can landlords do anything to attract millennials, or is this an issue of job availability?

Kunes: Absolutely, there's plenty they can do to attract millennials and be more competitive in the market. Just because some recent college grads are choosing to move back home, doesn't mean all are. Of course there's apartment amenities like good WiFi, communal spaces and upgrades that are helpful. But Millennials (and generations coming after them) are an on-demand generation. If you think about it, many of them probably don't even own a checkbook or carry cash around anymore. Given that, landlords need to incorporate technologies that support things like online payments/collections, texting and online maintenance requests. Millennials embrace technologies that help them be more efficient and save time – and these are often some of the biggest paint points with tenants today. Millennials don't want to deal with that.

There are some other ways, that won't break the bank, to offer outside the box perks to prospective tenants. Building-wide, social + networking events is a really easy thing to implement – and younger people thrive on those kinds of social aspects in their daily lives. Also, offering rent flexibility (and easy sublet options for renters who don't need to live in unit year-round) is another great perk as recent grads likely don't have enough saved to support rent payments for units they aren't able to live in. Other creative perks like the occasional Uber discount for paying rent on time 4 months in a row are types of ideas to spark interest with Millennials and retain them.

GlobeSt.com: Why do amenitized buildings perform better for this demographic?

Kunes: Frankly, it starts at the college-level. So many of the new dorms and buildings that are going up across campuses incorporate a gym, pool, media center, recreation center. It's just a way of life for this generation, and it's a social one at that. Amenitized buildings are a major plus, because people don't want to always be holed up in their small urban apartments – they want to have more space and more activities and more opportunity to meet other people.

GlobeSt.com: Gen Z, the next generation, will soon be graduating from college. How do you expect this group to respond to the housing market?

Kunes: If rental prices continue to increase and wages remain stagnant, Gen Z grads are probably going to be following some of the same patterns you see with recent Millennial grads – moving back home, when it makes sense. But, even more impactful, is that they'll be a new force in the rental market and landlords and property managers will need to adjust to their expectations. They'll likely be even higher than Millennials, especially where perks and technology are concerned. Unlike Millennials, Gen Zers literally don't know a world where everything is not “on-demand”. It poses a new set of expectations for landlords to fulfill.

Instant Insights /

Millennials Are Still Moving Home After College

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