Millennials are proving to be a dominant force in shaping trends in both real estate and retail with their strong preference for apartment living (12.3 percent plan to “always rent”), as well as their enthusiastic support of the burgeoning “subscription economy,” a growing business model that includes subscription boxes, in which subscribers receive products on a regular basis, such as Stitch Fix for clothes and Dollar Shave for razors and grooming products.[i] In addition to subscriptions, this consumer group is also turning to rental services for everything from high-end furniture to designer clothes. For millennials, subscriptions and rentals are about convenience and affordability, and that’s also why they prefer apartment living to homeownership.
The power of millennial consumers
In the U.S. there are 83 million millennials, who leverage $200 billion in annual buying power. As the largest consumer group in the economy, they wield the most buying power—and they’re choosing to spend their dollars in much different ways than previous generations, with a focus on experiences rather than ownership.[ii] For millennials, the ease and affordability of subscription boxes, rental services and the apartment lifestyle are all in close alignment; all these choices give them more time, more convenience, and more freedom.
Driving the subscription & rental economy
Millennials love subscriptions. According to a study by Deloitte, when it comes to entertainment subscriptions, such as Spotify, Netflix, and Xbox Game Pass, millennials have 17 subscriptions on average—more than any other generation—and 42 percent of them said they planned to subscribe to more services in the coming year. [iii] Subscription boxes are also highly favored among millennials, with 31 percent subscribing to subscription boxes, compared with 21 percent of Gen Xers and 8 percent of baby boomers.[iv]
Rental services, such as Rent the Runway for designer fashion, and Fernish or Feather, for furniture, are also popular with millennials, in part because the concept dovetails with the growing consumer consciousness toward more sustainability. The rise of higher-end furniture rental is also fueled in part by the apartment lifestyle; without being tied down with heavy-to-move pieces like sofas and beds, millennials are able to more freely move to explore jobs, neighborhoods, and relationships.[v]
Millennials and the appeal of apartment living
The millennial cohort is renting longer and redefining the concept of homeownership as the American Dream.[vi] With renting, millennials aren’t limited by geography, and they also avoid the hassle of home maintenance and unexpected housing costs. Millennials prioritize experience over ownership, and with apartment living, renters can enjoy amenities such as co-working spaces, on-site fitness centers, and smart technology conveniences such as package lockers—all conveniences that add ease to daily living. It’s clear that as the largest of generations, millennials will continue to have a major impact on the rental market, and that multifamily communities will need to include an array of experiences and amenities to cater to their wants and needs.[vii]