Real estate developer Post Brothers CEO Michael Pestronk discussed the emerging market of “forever renters” in urban areas, where a lack of housing options has led to renting being a preferred choice over buying.
He emphasized the demand for upscale apartments with spacious rooms and amenities, catering to a higher-end demographic.
“The biggest issue, especially in large established metro areas, is a lack of product. There’s no such thing as a starter home in large [Metropolitan Statistical Areas] anymore. There’s no land available to build housing within commutable distances of jobs,” he said.
The rent for these apartments ranges from $4,000 to $8,000, attracting not only millennials but also older renters.
“Most apartment buildings, especially over the last 10 years, have been built targeting a 27-year-old. And they have orange doodads as the design theme,” he said.
“We have a mid-Atlantic focused portfolio. Our average renter 10 years ago was 29. Today it’s 33. But we also have way more renters of the 35 to 45, making well over $150,000 than we used to have,” he said.
“These buildings, especially the ones that we’re focused on, are in locations where there is no opportunity otherwise to build new housing because they’re completely infill, there’s no land available. And so they’re in the locations that are in the highest demand,” he added.
Pestronk highlighted the shift in preferences among millennials and empty nesters towards urban renting over suburban homeownership.
“The biggest part of this story is really that the millennial generation has come of an age and an income level, where in previous generations they would have been moving to the suburbs and buying houses, and they’re not,” he said.
