Although it may seem as though the COVID-19 pandemic precipitated dramatic changes in how renters think of their apartments and how developers configure units, those changes had begun to manifest themselves in the decade before the pandemic, RCKRBX CEO Michael Broder told Connect CRE.
“Back then, we started to see these trends where [renters] were becoming less amenity oriented, and more ‘my own living space’ oriented,” said Broder. “The thinking was, if I was a renter, I’d rather see the developer put the money into the unit rather than the common areas. Not to say that amenities weren’t ‘important,’ but they were not at the level of impact that perhaps the industry thought they were in the sense of how much they influenced decision-making.”
Broder will take the stage at Connect Apartments 2025 in Los Angeles on Sept. 11 as one of the industry authorities brought together for the “Smarter Management, Smarter Living: A Spotlight on Proptech & Property Management” panel. He told Connect CRE that renters’ focus on their own living spaces became more “ingrained” during the pandemic as virtually everyone—whether renter or homeowner—was isolated at home.
Today, he said, renters who may have been satisfied with a one-bedroom unit before the pandemic now require larger spaces to accommodate home offices, and starting a family may mean staying in an apartment for five to seven years longer than would have been the case previously, due to the home affordability gap.
“So, you have this really interesting dynamic today, where the people who used to be in the smaller units are now desiring units that are larger,” said Broder. “And the people who would ordinarily be exiting out of those larger units are now staying there and even looking for bigger units.” Given that larger units are outnumbered by smaller ones in most markets, the result is apartment supply that is “fundamentally misaligned with where that market has evolved to and will continue to grow from.”
And although there may be regional or local variations in how well the market’s inventory can accommodate this evolution, “Generally speaking, the need for larger units is almost universal,” Broder said. “If I look at any of our data across the country, as well as national samples and regional samples, you see a significant downturn in demand for the smaller units. You see a much bigger uptick in those one-bedroom dens and two bedrooms, and even in some cases, two dens and three-bedrooms.”
There has also been an upsizing in lease terms. While the majority of renters still favor the customary yearly renewal, RCKRBX data show that more than one-third of renters now seek leases that run for two years or more. “They know they’re going to be in rental product for longer,” Broder said. “When they find a product that is ideally situated for their foreseeable future, they want to lock themselves into a rental rate that may actually protect them from downstream increases.”
He continued, “Those are pretty important dynamics, and they’re far more impactful than which amenity is in favor today versus what’s the flavor of the month.”
Not that amenities don’t play a part. “We look at amenities in the RCKRBX platform pretty granularly,” Broder said. “We can tell you in any given market or submarket, or for that matter in any product, what amenities or other programming, features, or functional attributes really move the proverbial needles in terms of consideration and choice for the renters a developer or owner is targeting.”
Meet the nation’s top owners, investors, developers, brokers, and lenders—key decision-makers shaping the multifamily market. Whether you’re targeting capital partners, strategic suppliers, or industry visionaries, this one-day conference on September 11 in Los Angeles is your opportunity. Network smart, exchange insights, and forge relationships that drive deals. This isn’t just a conference—it’s where the dealmakers go. www.connectapts2025.com
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