It provided a home and a community to him for the next four years. It also had a certain character that he’d heard others refer to as “newlyweds and nearly-deads.”
His apartment, built in the 1960s, tended to have two types of renter: young adults looking for their first real home, either singly or in couples; and senior citizens looking for an affordable place, without stairs to contend with, to enjoy their sunset years.
Families with kids were rare.
That is because in the 1990s, and for decades before that, families with kids generally avoided apartments. The expectations of society dictated that families who could afford it moved out to the suburbs, with homes next to safe streets and big backyards for their kids to play in.
Home ownership encouraged after the war
In the decades following the Second World War, home ownership was encouraged, both implicitly and explicitly. Purpose-built rental apartments were left to take up the remainder of the market, which tended to be the very young and the very old.
That has changed since the ’90s. Apartments have become increasingly in demand with older young adults — those in the 25-to-34 age group, today known as Millennials — now that urban lifestyles have become fashionable and high-rise condominiums have shown the allure of high-rise living. I’ve talked a lot about this trend.
What is interesting, however, is that as demand for apartments has increased, the desires of the old and young demographic have increasingly diverged.
The apartment building my colleague lived in housed a mix of one-, two- and even three-bedroom apartments. At the time, it catered to the young and old equally. The young renter of today is looking for smaller apartments. Bachelors and studios are becoming their bedroom of choice.
Partly a question of affordability
This is partly a question of affordability. The real estate boom in major urban centres such as Toronto and Vancouver is driving up prices almost to New York City levels. Those who want to live in the thick of things have to make compromises, and one of those compromises is space.
Millennials have adapted to this necessity. Some embody an ethic of living light, but most take the pragmatic approach of viewing their apartment as a bedroom. The apartment building itself, and the neighbourhood around it, is where they have their living room.
Apartments that want to successfully cater to young tenants need to focus on offering more amenities in their common space. Lobby lounges, even coffee shops, can prove attractive to would-be young tenants. Free wireless Internet would be a substantial perk. However, few things attract young tenants better than a good location.
Millennials are willing to pay a premium for a space close to their work, walkable and transit-oriented, and has a neighbourhood of entertainment choices.
Seniors, on the other hand, need their space. They want at least one bedroom, possibly more. They appreciate amenities which foster a sense of community, but those amenities are very different, emphasizing independent living, a quieter and more building-centric sense of community, and convenience.
A convenience store is likely to be more valued by senior citizens than a coffee shop, unless that coffee is Tim Hortons.
Growing in size and wealth
Both markets, however, are on the rise — growing in size and purchasing power. Many Millennials are staying single and childless longer, and are thus earning more money in the workforce. Senior citizens are increasingly baby boomers who have behind them decades of hard work building up their retirement savings, not to mention suburban empty nests they have sold.
But marketing to these two groups now requires two different approaches. Returning to the example of my colleague’s first apartment, he happened to visit the building again more than a decade after moving out. The average tenants were noticeably older. The newlyweds were nowhere to be seen.
Once an apartment building is built, it is hard to change its interior to match changing markets. The young adult market has evolved away and is looking for something more their style.
Derek Lobo is the founder and CEO of SVN Rock Advisors Inc., a real estate brokerage with over 30 years of experience in helping investors make the most out of buying, selling, and renovating purpose-built apartment buildings. Learn more about SVN Rock Advisors Inc., Brokerage on their website at www.SVNRock.ca.