Here are two important facts it is essential to understand about new rentals and their target renters:
- Overlooked Fact #1: Anybody and everybody can be a renter. No really, it’s true. Readers who work for property management firms should think about the rental buildings they manage: can you provide a profile of a typical renter? You can’t because your buildings are filled with households of all ages, all family arrangements, different numbers of people, different ethnic/cultural backgrounds, and a wide range of incomes. This phenomenon is the same across the rental market. Separating households into categories artificially and unnecessarily shrinks the overall pool of prospective renters.
- Overlooked Fact #2: Most cities in Ontario are so amazingly under-supplied with rentals that the gap between demand and supply is so large that most developers will never need to worry about attracting specific types of renters in sufficient numbers to fill leases in new buildings. To put it bluntly, there will be plenty of renters of all types to fill your new buildings, at almost any asking rents.
I’m tempted to end this article right here, since those two statements both lead to the simple conclusion that target renters don’t really matter when leasing new rentals. But that conclusion is too easy to dismiss—Hitchens’s Razor applies here—so I think it’s worth discussing both facts in detail, not only to demonstrate that that conclusion should be taken seriously, but also because discussion will lead to a better understanding of the broader relationship between new rentals and their target renters.
Practically speaking, assuming you can identify with certainty what types of renters will want to rent in your new building, how can you design your new building to attract specific renter types? Is this done using amenities or floor plans? I’m not sure this would work, since not all renters use all amenities and not all renters prioritize amenities in their searches. Is it done with interior decorating schemes? Again I’m not sure, since decorating has a shelf life and tastes are constantly shifting, which means in a few years a new building’s decor will probably be outdated or unfashionable. Is it done using advertising and marketing? I’ve no doubt this can have a impact, at least for the initial lease-up, but rentals need to be regularly re-leased over time and maintaining targeted marketing long-term seems unnecessarily restrictive. Resident demographics change over time, so if you target high-end, specialized renter types for your initial lease-up it’s likely you’ll eventually have to accept different renter types.
Ultimately, the question changes from “What renter types should I target?” to “What is the ideal target renter?” Wouldn’t most developers, when it comes down to basics, say they’d be happy with prospects who can pay the rent and aren’t troublesome? That’s a pretty broad category which captures a large portion of total available households. As I’ve explained above, I don’t think there’s much point in trying to identify more and more granular renter profiles in an effort to target them specifically.
Bottom line? DON’T OVER-THINK RENTER TYPES. You can’t possibly design units and amenities precisely enough to 100% match the needs/preferences of any particular renter households—or whatever percentage match is required to get them to lease—nor can you possibly provide enough unit configurations and amenities to 100% match the range of different renter households. In fact, it might be risky to do that, since demographics change and tastes and preferences change, which means your building, if it is too specialized, might not remain attractive to a large enough pool of renters long-term.
In other words, broad brush strokes are needed. Design and build buildings with practical, livable units and amenities which would be usable by the broadest range of household types and let renters do the profiling and filtering themselves.