Gen Z will soon surpass millennials as the most populous generation on earth and will account for more than one-third of the world’s population.[i] Gen Z—born between 1997 and 2012—now represents 40 percent of all consumers and is also the fastest-growing segment of the rental market.[ii] Its oldest members are entering their 24th year in 2021, and they are now graduating college, entering the workforce, and seeking apartment homes of their own. RENTCafé, analyzing more than 3 million applications processed in 2020, found that 22% of the applicants were born after 1997, and Gen Z renters accounted for the second-largest share of the rental market.[iii] What trends define this new wave of renters, and how do they differ from previous generations?
The first generation of digital natives
While millennials grew up during the evolution of the modern internet, Gen Z has never lived in a world without the internet or social media. Members of this young generation are experts at online research and expect immediate results. A report from IBM and the National Retail Federation (NRF) found that 60 percent of Gen Zs will not use an app or website if it is too slow to load.[iv] That means these renters will conduct online searches, usually from their phones, so property websites need to be optimized for mobile viewing, speed, and user experience. This up-and-coming generation’s reliance on digital means they also want to be able to apply, sign a lease, and make rental payments online.
The power of reviews
Online reviews matter to Gen Z. As part of their online research, they pay close attention to product recommendations and reviews. According to study by Social Media Link, nearly eight out of ten read online reviews before closing a transaction.[v] Because online reviews are an essential factor in decision-making for Gen Zs, having both a strong online presence and reputation management strategies in place is more important than ever for this cohort.
Gen Z is more concerned about the environment and sustainability than any previous generation, according to the Deloitte Global Millennial Survey 2020 (which surveyed both millennials and Gen Zs). Climate change/protecting the environment was Gen Z’s top concern.[vi] They are translating that concern into action, with environmentally conscious choices, which include living in a rental community that reflects their values. Sustainable features that appeal to the Gen Z renter include bike storage, energy-efficient appliances, smart thermostats, and LED lighting.[vii]
Spaces and places to socialize in small groups
From pods to posses, Gen Z are much more interested in forming friend groups than a household, according to a webinar hosted by Multifamily Executive.[viii] The ability to socialize with friends or coworkers is especially important to this younger demographic. What they’re looking for in a rental community is common areas where they can gather in small groups of four to eight people, including co-working spaces, lounges, community kitchens and outdoor spaces. This generation also wants social experiences that foster a sense of community, according to Multifamily Executive’s “The Next-Gen Renter: 2020 and Beyond,” which surveyed over 23,907 residents nationwide. Close to a quarter (22%) of Gen Z renters have expressed a desire for wellness classes such as yoga and meditation.[ix]
Overall, the young renters of Gen Z thrive on personalized and unique experiences. They value the convenience of technology and want to live a socially active and environmentally responsible lifestyle. As their influence and numbers grow, multifamily management companies should keep their preferences in mind as they prepare to cater to this distinct generation.