Broker Check

September 2015 Perspective: Housing the Millennial Generation

September 01, 2015

This month’s Perspective is a recent Wall Street Journal article discussing a niche real estate opportunity: mid-tier apartments.  The article features the perspective of one of our specialty investment managers who is an expert in this space, Kevin Finkel, at Resource Real Estate.


Young workers and working class families, loosely defined as the Millennial generation (those born 1981-1999), have a unique set of needs and circumstances that have made them “the Rental Generation.”  The following background facts about Millennials may help provide some context for the trends discussed in the article:


  1. Millennials are often burdened with student debt, lack of savings and less-than ideal credit:
    • Median Income: $39,000 2
    • Average student loan for a 2015 graduate: $35,0003
    • 42% of Millennials say debt is their #1 concern4
  2. Mobility, meaning the freedom to go where they want to go, is a top concern:
    • Millennials have an average 5 different jobs by age 305
    • 62% plan to change jobs in the next 2 years6
    • 83% are willing to relocate for a new job7
  3. Lifestyle  preference means being close to work, dining and shopping:
    • Millennials prefer to work within 20 minutes of home8
    • 66% say access to high quality transportation is a top three priority9
    • 75% say neighborhoods without transit access are less appealing 10


The demand for rental properties is not being met by the new supply of housing. New apartment supply has been low and below average for the past 10 years. Most new buildings are luxury Class A apartments because they are more profitable for developers. However, Class A units are simply too expensive for the average Millennial to afford.  


Demand is booming for clean, renovated, up-to-date mid-priced apartments in good locations. Rents are rising as a result.  This presents an opportunity for experienced management teams who can acquire older apartments, efficiently renovate them and bring the units to market that Millennials demand. We don’t see this supply/demand dynamic changing anytime soon. We hope you enjoy the article:

  1. “PayScale Study,”, 7/1/11-7/1/12; 3. Jillian Berman, “Class of 2015 has the most student debt in U.S. history,”, 5/9/15; 4. “Eight in Ten Millennials Say Great Recession Taught Them to Save ‘Now,’”, 6/10/14; 5. Jeanne Meister, “Job Hopping Is the ‘New Normal’ for Millennials: Three Ways to Prevent a Human Resource Nightmare,”, 8/14/12.; 6. Hiring Site, by CareerBuilder, “Five Things You Might Not Know About Millennial Candidates,” 8/28/12; 7. Jen Wieczner, “10 things Generation Y won’t tell you,” The Wall Street Journal Market Watch, 8/21/13; 8. Jane M. Wolkowicz, “The 12 Must-Haves for Any Gen Y-Friendly Apartment,” Multifamily Executive, 5/23/12; 9. Angie Schmitt, “Survey: Millennials Willing to Relocate for Better Transportation Options,” Streetsblog USA, 4/23/14; 10. Schmitt, 2014