What do today’s renters want? They want to live in multifamily buildings equipped with high-speed Internet. And they want space that allows them to work from home, whether that space is in their units or in their building’s common spaces.
Dan Melton knows this. He is vice president of technology for Farmington Hills, Michigan-based Village Green, one of the country’s busier multifamily lease-up and property management companies.
And he says that this trend isn’t going to slow anytime soon. After all, a growing number of renters continue to work from home at least on a part-time basis. Because of this, they need fast and reliable online connections. They also need enough space to set up a home office.
Village Green manages more than 40,000 apartment homes within 50 cities. It made sense, then, to speak with Melton about the changes he is seeing within the multifamily sector, from the technology that clients and apartment owners want to today to the economic and social changes that are driving more people to renting.
Here is some of what he had to say.
You’re obviously focused on technology in your role at Village Green. With that being said, what kind of tech are renters and multifamily property owners looking for today?
Dan Melton: If anyone tells you that the technology that is most important in the multifamily market stays consistent across the board and never changes, that would be a fabrication. It is constantly evolving.
But there are some trends that we are seeing today. For instance, renters are focused on ease-of-use. When renters are looking for new homes, they want to find them easily. They want to go online, put a couple of things into Google and have Google tell them exactly where those properties are. So our building owners need to make it easy for renters to tour their properties and get answers to any questions that they might have. That means AI technology. It might mean chatbots that prospective renters can interact with. These are important today.
The second thing that is important has to do with the many people who are working from home. Whether these renters want to work from home in their units or in a coworking space in their building’s common areas, they need the technology to support it. Our building owners, then, are offering fast high-speed Internet service to give their renters that ability to be flexible in where they work. They don’t have to worry about having an office upstairs in their units. They can instead connect to broadband Internet in their buildings’ common spaces.
Last, but not least, this is an Amazon world. Renters want to do everything online. They want to put in a work order and pay their rent online. They want everything in an online one-stop shop. If their sink is dripping, they want to be able to put in a work order online through an app. If they want to pay their rent, they want to do it online.
Is that last part a trend that you think will gain strength?
Melton: Definitely. We want to put everything that our renters might need online. And not just online. It has to be mobile. We know that at least 95% of our renters have a cell phone with cellular data. They can put in a work order from wherever they are using an app.
Some of our renters do want to call their property manager when they have problems. They like that human interaction. But some don’t want that at all. A good portion of our communities out there are filled with renters who would rather not bother talking to the staff on site. They want to get their work orders filed right away without picking up the phone.
What about security? Is there any tech that renters or building owners are looking for when I comes to boosting security in multifamily buildings?
Melton: We were just on a call this morning with a third-party partner looking for the right security solution for self-guided apartment tours. The security concerns we see from renters and property owners focus on who has access to the building, whether a potential renter taking a self-guided tour or a vendor in the building to do repairs or updates. The biggest question is how do you validate that this person should be there? How do we know who they are?
Consider a potential renter who wants to take a self-guided tour of an apartment property. That person might schedule a tour for Sunday at 7:30 at night. The staff won’t be there at that time. So maybe that potential renter takes a photo ID and a photo of their face. That validates them. We might also run a quick penny test on their credit card to help verify they are who they say they are. They are then approved and gain access to the building.
Security, then, isn’t just about a deadbolt and lock. It is about who is coming into the building.
Speaking of self-guided property tours, I know they gained popularity during the earliest days of COVID. Is that something potential renters still want?
Melton: It’s a mixed bag right now. We get people who enjoy the convenience of scheduling a self-guided tour. We also see good conversion rates from self-guided tours. We are converting almost 65% of the people who take self-guided tours into renters. For in-person tours, we are satisfied if we convert 40% of the people who tour a property.
The people who like self-guided tours don’t want to have the person with the sales pitch along with them on the tour. Or maybe they want to do a tour in their off-hours, when staff won’t be available. The people who like self-guided tours like the flexibility that comes with them.
A lot of the people who do self-guided tours have already seen the buildings they are touring online and have already decided that they like what they’ve seen. The self-guided tour is like the icing on the cake, the final piece before they decide to rent a space.
How important is technology like high-speed Internet for renters today?
Melton: When you look at physical amenities, the on-site fitness center is great to have. Renters can save money on gym memberships. But having high-speed Internet in a building, the ability for prospective renters to find a home that is accommodating to their current profession or will allow them to jump into a new profession, is extremely important today.
So many people need to have high-speed Internet. That has almost become the number-one must-have amenity at the properties that we manage. People want the ability to work from home and the ability to connect to the Internet at high speed, both in common areas and in their apartment units.
Are building owners making sure, then, that high-speed Internet access is included in their newly developed properties?
Melton: Absolutely. The research has been done. And in some of the older properties that we manage, those built in the ‘60s or ‘70s, we are seeing owners retrofitting. They might repurpose space to make it more conducive to people who want to work from home. They are adding high-speed Internet. With new properties, high-speed Internet is the number-one or number-two priority.
Are you seeing more people make the decision to rent rather than purchase a single-family home today?
Melton: Higher interest rates and home costs have had an impact on the rental market. More people want to and need to stay in their apartments for a bit longer today. They need to save up more money to get ready to buy a home. Interest rates aren’t attractive enough that they feel they must jump on buying a single-family home now. It’s the same thing with home prices. If they continue to rent, they can save more money. Our average renter used to stay about two years in the properties we manage. Now we are seeing them stay three or four years.
We are also seeing more demand for build-to-rent homes. They look like traditional single-family homes. They feel like neighborhood homes. But they are rentals. We manage some of these around the Twin Cities. They mimic the experience of owning a single-family home. They have a front yard and an attached garage. But you are renting. They also typically have some sort of community space. It gives you the best of both worlds: the space, the garage and the amenities of an apartment. And you are not locked into a mortgage or high interest rate. You can renew if you want.
These do tend to be located in the suburbs. There was a time when people really wanted to live in the downtown urban cores. But we’ve seen a little shift in that since 2020 and COVID. Now people want to get out to the suburbs. Many people have no need to live downtown. They might be working two days a week in the office and three days from home. They can live in the suburbs and get more space without worrying about commuting every day. We are still seeing the residual impact of this, increasing the demand for rental units in the suburbs.