Yes, it’s true. . . just when we were getting the hang of Millennials, Generation Z is upon us.
To me, one of the most fascinating aspects of the multifamily industry is the broad range of our clientele across the generations. Where else do you serve such a diverse group of target customers with something so personal and primal as the very home and community in which they live? With each new generation we face the challenge of blending what is important to the current generations we serve while simultaneously renewing our physical product and supporting services to attract and appeal to the new generation coming of age. Recently, I’ve spent some time researching the various statistics and opinions of what makes Generation Z unique and how that is expected to influence their behavior as consumers in the future. To that end, I offer the following few simple thoughts and takeaways of what it means for our industry to begin preparing now for what is to come.
There are varying statistical references as to the precise makeup and definition of Generation Z. For the most part, it is agreed Gen Z consists of all those born in 1995 and thereafter. According to Forbes in 2015, this generation made up 25% of the U.S. population. They contribute an estimated excess of $44 billion to the economy and are further expected to grow to a full third of the U. S. population by 2020. This makes them a larger generation than both the Millennials and the Baby Boomers before them. As the first of Gen Z is just now coming to the age of entering the housing market, it is clearly time to prepare for the tidal wave of this demographic visible on the horizon.
Unlike any generation before them, including Millennials, Gen Z is the first generation to grow up entirely in the age of smartphones and social media with a global information perspective. They are not just tech-savvy, they are mobile savvy. If they can’t find it quickly and interact with it in the palm of their hand, they’re likely to immediately move on. As consumers they expect a personal experience, tailored specifically to them, with a nearly instant end result. They are highly socially minded, both in terms of social consciousness and in peer/social/community interaction. They are looking for ‘real’ information they can see and share, care less about polished, staged advertisements and production values, and prefer to get their information from trusted sources that are known to them. Having grown up during the recent financial crisis, Gen Z is expected to be more conservative and value conscious than the previous generation. They have a more entrepreneurial outlook, and are expected to be slightly more focused on education and career.
From the product and amenity perspectives, it is time to start thinking about what will appeal to Gen Z. Functional common space that they can be used for collaboration, creativity, and community engagement will be very important. They are less likely to use traditional pool and fitness facilities as they are lounging and conversational areas, artistic and crafting spaces, and larger group kitchen amenities. Remember, community and experience are of utmost importance. Environmentally responsible buildings and amenities will be very attractive. Smart home features will be of greater demand in the rental space. Gen Zers expect to be able to interact with their environment via their smartphone. Smart locks, learning thermostats, and similar wireless conveniences will likely be a minimum expectation in class A/B price points to this group. Seamless high-speed WiFi access and USB ports/charging stations will be expected in common areas. While we don’t necessarily think of corporate social responsibility as an amenity, Gen Zers will look for and be attracted to properties/companies that promote and contribute to a strong social consciousness and improved worldview.
Marketing to Gen Z is likely to be very different than previous generations. Much has already been said in other industry articles about making sure your marketing media is not only tailored to, but designed for, the smartphone, so consider that a given in this post. What is more unique is the need to do two things very well: marketing and reputation management through peer-based social media, and ensuring prospect engagement and communication is interactive, automated, and nearly instantaneous.
With social media marketing, Gen Z does not want traditional online advertisement and in most cases will have already blocked it via various ad-blocking technologies. This includes current multifamily industry social media advertising norms vis Facebook, Twitter, etc. Gen Z will engage their own peer network to hear about what products they can trust and are less likely to even bother with more formal online review sites and similar resources. They will also want to see simple video of the actual space they’d be renting, not staged videos of near perfect furnished models. They live and breathe on more casual media sites like YouTube and Pinterest. As such, they are likely to more favorably respond to a simple YouTube video of the actual available apartment than that of a more formal video of the perfectly furnished model with high-end production quality. Unlike previous centrally or corporate driven social media advertising posts, going forward our leasing and marketing teams will need to be active participants in peer-level interactive social networking if we are to attract this new demographic.
Prospect communication and engagement must also evolve to meet the demands of Generation Z. This generation expects a near instantaneous electronic experience and will not waste time with email. They are likely to expect to transact their entire experience from initial contact through lease signing on their smartphone, engaging in chat/texting sessions when further communication is necessary or desired. Being extremely value conscious, Gen Zers will expect a good deal. They have grown up as consumers fully-immersed in an instant coupon and flash sale online sales culture and will expect similar approaches to rental housing. Traditional approaches to online multifamily pricing and “specials” will likely not get as much of their attention. Full automation of as many of these leasing and pricing processes as possible and the ability to have a live chat response is critical. These systems take time to plan, implement, and resource, and it is time to start getting them moving now.
Lastly, and most importantly, it is time to start preparing and training our people for this new generation. While we are sure to begin to add Gen Zers to our teams, the initial majority of our workforce will not naturally understand how to engage this new demographic, soon to be dominant in our industry. Peer-level social networking tools and training should become an immediate and standard part of all core systems and team training programs. Our leasing and sales culture must evolve to that of a more community and social-based approach to prospect engagement if we are to attract this generation. Further, though our on-site teams already do a fantastic job at building and delivering a true sense of community in most cases, it will be even more critical that they are active participants and promoters of the community and social culture in the way most appealing to Gen Zers if they are to retain them as long-term happy residents.
While Generation Z is not yet a significantly measurable portion of our current customer base or prospect pool, they are rapidly approaching and are coming in great numbers. The time is now to strategize and implement the tactics and support resources necessary to be the first to welcome them to their new homes. . .