Multi-‐Family Roundtable November 10, 2010 Question and Answer Session Roundtable Discussion Leaders: Alan Kolar-‐ Mill Creek Residential Trust, LLC Gregg Logan-‐ RCLCO -‐ Robert Charles Lesser Randy Anderson-‐ UCF Daryl Spradley-‐ Charles Wayne Stephanie Brown-‐ Riverstone Residential Discussion Questions: QUESTION: “Two demographic groups with increasing influence are the Generation Y (born between 1981 and 1999) and WINKs (Women with Incomes and No Kids). How will these two groups impact the multifamily industry in Orlando?” GREGG: “Gen Y First - WINK are a subset of Gen Y so let me address Gen Y First. i) 78,000,000 Gen Y nationally (1981 to 2000) (1) Between 2008 and 2020 57 million will reach age 22, beginning of prime rental age (2) So far, more are going in to existing rental properties, renovated properties and some in new but non-luxury properties due to issues of affordability. Also competition with condo’s and other properties available for rent due to over-supply on the for-sale side. (3) Have been hit hard by the economy – many have moved back home with mom and dad, and those in apartments have at least one roommate, often more; as economy improves and they “Un-Pack” this will have a very positive impact on rental demand. (a) So far due to economy, Gen Y’s not yet having the impact we expect. But it’s coming. (4) Long term demand looks very good in terms of demand for new product, for the next 10 years (5) Central Florida, about 677,752, age 10 to 29 currently; they enter the market over a 19 year period, so it’s a sizeable impact that should equate to demand for over 10,000 units annually on average (a) Of those of rental age, fairly split between urban and suburban areas
(b) Our research has shown strong interest in places with urban amenities among this group, BUT important to note that they split about 60%/40% in terms of urban versus suburban preference (i) The point is MORE Urban demand than in the past, but lots of demand for Suburban in the right locations, ie close to restaurants and shopping and employment – they want to live where the action is, which is mitigated by what they can afford – right now they are making compromises due to what they can afford. (ii) They do like walkable places over driveable, mixed-use areas versus single use. (iii)Smaller better designed units and strong amenities – fitness centers, social pool area, internet café, gaming rooms.QUESTION: “WINK’s Women Income No Kids, in their 20’s, well educated, typically earning over $50,000, what’s their influence likely to be?” GREGG: ii) Delaying marriage, renter by choice, like walkable neighborhoods, accepting of smaller but nicer; want security iii) Care about your “Green Initiatives” even if they’re not going to pay you a premium for them. iv) Work life balance is especially important to them – want convenience. v) Like things like fitness centers, quiet sitting areasa, libraries, that you have a recycling center on site vi) Somewhat more urban and/or urban suburban oriented than Gen Y overall. vii) Select the property first, then the unit itself. viii) There are 423,000 Gen Y women in Orlando MSA; about 296,000 are potentially WINKS, childless and not married; that’s not income qualified.QUESTION: “There has been a lot of focus on sustainable design and “green living” by the media and local municipalities. How important are “green features” in apartment homes for renters? What are the desired features, amenities and pricing in new apartment product?” ix) GREGG: x) We did a national survey of Renters, and 45% told us that they care about the environment and will take actions and spend money to protect it.
xi) However in terms of what drives them to rent an apartment, Cost, Safety, Unit Features and Design, Proximity to Work, Proximity to Shopping and Entertainment, score a lot higher than “Green” features or attributes.xii) Only about 37% of renters connect their home with something that impacts the Environment, and therefore their choice about where to live. However, about 20% of renters say they’re interested in renting a “Green” apartment if they can find one. Younger renters in particular less likely to pay for environmental compatibility.xiii) We looked at “Me” Green versus “We Green” in a large survey of renters sponsors by several large Apartment Developers nationall. We found that “We green” components influence choice of community and length of stay for less than 15% of rentersxiv) “Me” Green includes Energy Savings - Energy-savings may influence choice of community for 25% of renters, but less than 10% of renters willing to pay more for an energy saving communityxv) Almost 20% of renters willing to pay more for a community that provides better indoor air qualityxvi) LEED may be industry standard for development community, but renters don’t know the brand. Energy Star on the other hand is well known and a benefit.xvii) That said, we believe our survey shows MANY opportunities for low-cost “greening” that address important motivating factors