The rise of the experience-based economy has increased the popularity of services that handle the particulars and make it easier for the customer to enjoy their experience while finding exactly what they are looking for. Travel agencies, clothing curators, and subscription services are just a few examples of how consumers are willing to go with a brand that takes the stress out of the process.
The housing industry is catching on to the concierge trend, especially rental markets that thrive on discerning customers looking for an ideal experience. Researcher Bob Cain found that middle-income individuals represent the largest renter demographic at 37 percent of the total market. These are renters who could afford a home but choose to rent instead. For them, experience and quality of life are everything.
Additionally, the rental market is experiencing steady growth with the Rental Protection Agency reporting an average growth rate of over 2,600 renters per day. These newcomers to the rental market will be looking for better listings and expecting services that help customize their search to find the right home for them.
Concierge services and tech startups aren’t just improving the experience of consumers, they are also upgrading the technological underpinnings of the industry. Ashrit Kamireddi, CEO and founder of VeryApt, a concierge service for apartment hunters, explains, “We use natural language processing to take all of our review content and feed it into the recommendations; we also use millions of data points to optimize people’s commutes and simply convey that information on each apartment listing.” The benefits of data-driven platforms for the industry are more unbiased actors who can help consumers and businesses find each other based on real matching criteria.
What’s Behind the Surge in Real Estate Concierge Growth?
There are a few key trends driving both experiential and technological upgrades in the housing industry, most of which can be attributed to changing expectations from consumers, and the industry’s need to adapt quickly.
Millennial Renters Expect Experiences:
As Millennials advance in their careers, they are becoming the most influential consumer group. Millennials with expendable incomes are looking for luxury apartments in large cities that are surrounded by dining and entertainment options that match their experience and travel-centric lifestyles. They are also more concerned with layout, and quality of life more than they are space. Kamireddi shared, “People are voting with their wallets and smaller units provide greater mobility, better rents, and common amenities.” He adds, “By a longshot, the most called out items in reviews according to our Natural Language Processing system are location, value, and access to transit. Shortly after is the quality of staff and management.”
Millennials are also slower to buy homes than previous generations, with most waiting at least 1-2 years longer before making a first home purchase. That kind of delay will continue to grow the rental market, especially in city centers.
Buildings Turn to Services for Help:
There is a massive amount of administrative work that goes into finding the right renters, and in some cases, large marketing budgets eat away at a building’s profits. Not to mention the onslaught of applications that come from listing sites that do little to curate the quality of applicants.
To help offload some of this administrative overhead, apartment buildings are contracting with concierge services to help increase reach and simplify the selection process. Kamireddi shared, “By providing properties with real data, they can better target their capital investments towards improving tenant retention” Since these tech services often help reduce overhead the shift in thinking involves minimal risk for property managers.
Empty Nesters Want to Shorten Search:
Empty Nesters are opting for smaller footprint homes and apartments more than ever. As baby boomers move out of the house and into apartments, they are going to be looking for solutions that are easy to use and take the hassle out of scrolling through many listings online.
Recent data bears this out, with Mike Fratantoni, Chief Economist at MBA sharing, “Rates are still too high to attract much interest from homeowners looking to refinance, and purchase activity was relatively weak.” He was commenting on how activity week to week has been decreasing by several percentage points. For former homeowners, or baby boomers interested in renting, the idea of searching for an apartment might seem daunting, especially if it’s in a new city. That’s why concierge services are courting these influential consumer groups, not just millennials.
Property managers should consider what functions concierge services may be able to take over to save both time and money for the building. Renters will continue to get more discerning as the data available to them becomes better. Additionally reaching ideal renters will become more difficult for properties that aren’t listed where those ideal renters are searching.
Concierge Bell Photo via Shutterstock
Only if you have someone to manage the customers will milliennials get the experience that they are craving for.