Gen Z Wants Sustainable Housing, But Will They Pay For It?
As Gen Z enters the multifamily rental market in a big way, investors are asking what these renters value in an apartment, and how to give it to them. The generation's documented concerns about environmental issues such as climate change have many in the multifamily market looking to sustainability as a way to capture their attention.
But will the 72 million people born between 1997 and 2012 spend more for those features? Experts aren't so sure.
"I’m not quite sure that people put their money where their mouth is," California Landmark Group principal Ari Kahan told the audience at Bisnow's Los Angeles Multifamily Update on Tuesday.
While these features are certainly attractive to renters, Kahan said he has yet to see major investments in sustainability allow for higher rents.
"While [younger renters] do care about that, they are substantively more price-sensitive," Kahan said. "Unfortunately, that’s the world we live in. People need to choose where they live based on what they can afford, not on what they want."
Because members of Gen Z aren't necessarily spending more to get those sustainability features, Kahan said he doesn't imagine that developers will spend more on those features just as a means to court them.
Other speakers on the panel touched on the challenges of adding features like air filters that often make a large impact on well-being but are largely invisible to tenants. To fully reap the benefits, owners should communicate these upgrades with tenants.
"You can know that there's good air quality and do your air quality testing, but unless people can see a filter, see a dashboard on their Nest [thermostat], it doesn't count," Lendlease Americas Head of ESG Sara Neff said.
Other amenities once thought of as bonuses are gradually becoming necessities as the state building code and tenant expectations catch up. Electric vehicle charging stations, for example, are already a necessity for many and demand is only expected to grow as the state moves toward its deadline to phase out new gas-powered vehicles.
Other speakers on the panel included USGBC Los Angeles Executive Director Ben Stapleton and SunPower Director of Multifamily New Construction Sean Doak, along with moderator Daniel Gehman, principal at Danielian Associates.