By Julie Smith, President, Bozzuto Management Company
**This article orginially appeared in Delta Associates’ Mid-Year 2012 Mid-Atlantic Class A Apartment Market report.
The DC pipeline is swelling with a growing supply of carefully planned new properties. This next round of deliveries will be a cut above what we saw out of the last cycle in terms of design, amenities and finishes. The DC landscape will change once again with old neighborhoods becoming new hotspots and newly created neighborhoods boasting exciting mixed-use rental opportunities. Mount Vernon, Shaw, Brookland, NoMa, H Street, and the Southwest Waterfront, just to name a few, will give the coveted urban renter even more options. So, who are these urban renters?
They are young. According to a recent report from the Boston Development Authority, Washington, D.C. is a young city with the third-highest concentration of young adults (ages 20 – 34) among the 15 largest cities in the U.S., trailing only Boston and Austin. Not surprisingly, this trend is playing out in Bozzuto’s portfolio of apartment communities – more than 67% of our urban renters fall in to this age group. They are also more likely to live alone if they can swing the economics. And more than half are female. Given that 75% of these customers are young and single, they are four times less likely to have children in the apartment. But they will have pets and that number will equal what we see in suburban locations.
They are rich: they are twice as likely to have an income in excess of $100,000. The number of our urban renters who have moved due to money problems and personal concerns has dropped by 60% over the past 12 months. They are twice as likely to work from home, making their apartment a place where they spend a lot of time. They are not first-time renters.
Even with the combination of historically low interest rates and credit worthy renters, they buy homes at half the rate of suburban renters but are twice as likely to leave town for a job or personal reasons. They are, in fact free.
So, wealthy, independent, and not tied down? Yes, but also educated, savvy and wired. With high expectations as it relates to service. This is a customer that we already have and one that we all want to keep as long as we can.
It is worth taking a look why we could be at risk of losing them. A little more than half own cars and are four times as likely to walk or use public transit on a regular basis. And their daily commute is less than 30 minutes. Many measure this in terms of Metro stops. So as long as they can get to where
they are going within a half an hour, they consider locations all over the city that afford them this amenity. We have seen a 30% increase in residents moving due to their most recent rent increase, and more affordable options in new emerging neighborhoods have expanded their options. This means we will all find ourselves competing against multiple submarkets in this next round.
The Internet, as our primary source of commerce and their primary source of information, has led to a transparent marketplace for housing providers and housing seekers. Today’s renter is savvy and has easy access to real-time pricing and availability. They shop for apartments from their mobile devices and have their finger on the pulse of the market. They know more about us when they walk through our door than any time in the history of our business.
The good news is that they are loyal and will stay longer, on average, than the suburban renter, and will also move internally into other apartments within the building as their personal status changes. We have seen the number of renters doing this increase by over 26% in the past twelve months.
Happy residents can be our best source of referrals and it is in our best interest to create as many as we can, as those who feel underserved will take their opinions online – for all of our customers to see. The end goals of increasing asset value for our investors and building value for our existing customers are not mutually exclusive, but we believe that it starts with knowing our customer and knowing them well. And as we brace ourselves for this next wave of new product, it is critical to really understand what it will take to attract them and what it will take to keep them exactly where we want them.