Older Households Make Gains in Small Asset Unit Demand, Millennial Households Form the Largest Share
Complementing the recent review of household composition and living arrangements, a closer look at householder age indicates the steady graying of small asset apartment demand.
Millennial Households Dominate Small Asset Demand
Householder age provides a direct proxy for the collective preferences and priorities of households. This includes rental space requirements, location needs, property and neighborhood amenities, and unit rental price.
Depicted below by the age of the householder, the age distribution within small asset multifamily skewed toward younger households in 2016. Roughly half of all households in this asset class were headed by individuals younger than 40 years old. The majority of which were members of the millennial cohort.¹
In comparison, due to higher rental prices and the lesser likelihood for having children, householders in this younger age segment make up smaller shares in the larger apartment asset and single-family rental categories — accounting for 37% and 44% of these households, respectively.
Baby boomers and seniors, who tend to have a greater need for neighborhood-level amenities and services, comprise the biggest demand source for large asset properties, making up 40% of households. Their presence is less significant in the other asset classes, as they account for only 20% of small asset households and 18% of single-family rentals.
Small Asset Shift Toward Baby Boomers and Seniors
While younger households dominate small asset multifamily, a distributional analysis of generational shares in 2016 and 2014 indicates a shift within this asset class towards the baby boomer and senior household segments.
As shown below, baby boomer and senior householders (60 years and over) gained a share of 146 basis points (bps) over 2014-16. This can be compared to a share gain of 124 bps in single-family rentals, and a decline of 75 bps in large asset multifamily.
The data reflects a pronounced shift towards millennials in large apartment buildings, contrasting against overall declining shares in the rest of the rental market. Gen X householder shares are lower across all asset classes, likely due to a shift toward home ownership.
With the steady graying of rental demand within small asset properties, owners and operators need to keep track of property level services and upgrades to attract this segment over the medium term.
1 All data is sourced from the American Community Survey (ACS), unless otherwise stated. ACS statistics are sample-based estimates of the compositional profile of the total population in the given year of data collection, and include a margin of error.