As the millennial generation has come of age, the family-oriented rental housing market is an underserved market for a larger-growing population and presents opportunities for developers.
In partnership with RCLCO, this new ULI Terwilliger Center report, Family Renter Housing: A Response to the Changing Growth Dynamics of the Next Decade, outlines the business case and need for more family-oriented housing now and in the next decade. The number of families living in the United States has remained relatively constant for the past 10 years, but this particular demographic is poised to experience explosive growth in the future as more millennials have children. This will require the development community to create new forms of rental housing that target a broader range of households, particularly family-oriented ones.
Although families represent a large share of the overall rental housing market, most new development is not oriented towards these renters. At the same time, housing preferences are shifting in a way that is becoming increasingly supportive of family-oriented rental development.
There are a number of roadblocks that developers cite in the push to create more family-oriented rental housing, including:
- The perceived level of risk due to the lack of market data suggesting otherwise;
- Regulatory conditions, including entitlement zoning, single-family zoning, impact fee burden and zoning codes that tend to attract luxury housing above all others;
- Fiscal policy that discourages new housing due to overcrowded schools; and
- Fear of large traffic impacts in the surrounding areas.
The report recommends a number of potential development responses to this burgeoning market, including:
- Suburban rental apartments;
- Suburban single-family rentals;
- Rental townhouses;
- Detached and attached apartments;
- Urban rental apartments for families; and
- Mixed-income and affordable housing.