As Unemployment Falls, the Demand for High-End Apartments Rises
As the national unemployment rate continues to decline, strengthening all job sectors and demographics, the multifamily industry is improving right along with it. The number of renters has reached an all-time high and demand has matched supply, unit for unit, for years. Luxury apartment demand, in particular, is driving oversupply and competition for Class A units. Growth is projected to increase at an even faster rate than previous years and developers will need to provide an additional 328,000 units annually between now and 2030 (4.6 million total units) to keep up with demand.
Tight Unemployment Strengthens Multifamily Demand
The declining unemployment rate, especially among college-educated professionals, strengthens the demand for high-end apartments. According to Marcus and Millichap, overall unemployment is down to 3.7 percent. College-educated unemployment is down to 2.0 percent, its lowest since 2007. Multiple factors have made the current market ideal for Class A and B apartments: extremely tight unemployment, an increase in jobs requiring a college education, high skilled labor shortage, and an increase in wages for professional jobs.
Current market factors are only expected to improve – from apartment vacancy and home interest rates to job growth. Recent changes to the federal interest rates are increasing the cost of home payments, which is another reason why apartment living is so attractive to renters. The year-to-date job growth has outperformed last year and there are far more job openings than those seeking jobs (7.1 million job openings versus 6.0 million job seekers). Finally, in addition to the strong Class A performance, Class C apartment vacancy dropped to 3.7 percent in the third quarter, down from its peak in 2010 of 9.4 percent.
Staying Competitive Without Offering Concessions
High demand typically pushes for rapid-paced new development and an increase in rent prices. While that is true, the current market is faced with increased vacancy and fierce competition within the apartment industry. Nearly 20 percent of apartment owners and operators offered concessions last year, up from 4 percent in 2015. We encourage you to not rush to offering concessions. Instead, understand market trends and how emerging tools can help you stay competitive without offering free rent.
What’s the best way to strategically compete in a tight market? Arm yourself with data-driven insights, the right mix of marketing tools, and revenue management to not only attract new renters, but increase your NOI as well. It’s easier said than done, but the first step is to use branding, SEO, and digital advertising to highlight your amenities and services that renters want.
How to Highlight Amenities that Attract your Target Audience
Invest in Your Website
Before you consider concessions, launch a new digital advertising campaign, or promote your community on social media, make sure your website is ready to convert leads from the first click. Think of your website as your first leasing consultant – the online face of your brand. How Invite leads to explore your community online through video tours, photos, and highlights of your amenities and services.
Focus on what makes your community and apartments valuable. Some of the most sought-after offers are house cleaning, dog walking, fitness center, messenger service, and business services. Class A renters are looking for ways to simplify their lives as much as possible. If you can offer these services, shout it from homepage.
Get Found Faster with the Right SEO
You can have the most inviting and content-rich website around, but it won’t work for you if it doesn’t include the right SEO. Think of SEO as the key ingredient to your website design and copy. SEO once relied on a targeted keyword strategy. Now, a streamlined content hierarchy helps guide readers to conversion. From there, your Google My Business (GMB) listing will be strengthened with more accurate data, maps, and knowledge graphs. Your SEO strategy, from site structure to copy and keywords, should drive organic traffic to your site. This is the code that search engines capture to put you at the top of their lists.
Now that you’re using the appropriate SEO to increase brand visibility, your website is ready to convert. It’s time to get the word out with digital advertising. When designing a digital advertising campaign, it’s important to reach your ideal audience, stay hyper-local, get in front of searchers at the right moment, and re-engage visitors even when they aren’t actively searching.
Advertising in the digital age means the technology changes fast and often. One of the latest new tools is Google’s Responsive Search Ads, the most flexible ad format to date. Powered by machine learning, Google can mix and match multiple headlines and descriptions to find the best possible ad combinations for unique searches and users. This takes the guesswork out of creating highly relevant and tailored ads to serve to your ideal audience.
Ensure Brand Consistency
Inconsistent content can cause confusion, frustration, and missed conversions. Take the time to check every business listing, review site, social media page, and old websites to make sure that your brand is showcased consistently across channels. It is also imperative that your online brand matches the in-person experience. Think of your best sales manager – your online platform should be representative of what makes that employee stand out. Branding is an especially powerful tool for lease-ups and can mean the difference between standing apart or blending in.
Get Informed: G5’s State of the Industry Report
From digital advertising and SEO to branding, G5 is the leader in real estate marketing. Earlier this year, we started publishing semiannual State of the Industry reports that combine multifamily industry performance and market trends with the latest marketing technologies.