Oct 13, 2017
Multiple Opportunities for Multi-Family
I had the opportunity to speak and lead a panel at the recent Hanley Wood MFE (Multi-Family Executive) Conference in Las Vegas. The MFE was all about “Planning for What’s Next” and there was plenty to talk about. The conference brought together some of the top thought leaders, developers, architects, influencers and suppliers to the multi-family market.
I led a panel about “The Next Frontier of Marketing,” and discussed the importance of the customer experience within the multi-family segment.
What’s Next in the Multi-Family Segment: The Top 5 Take-Aways
Baby Boomer Tsunami
Demographic changes will drive many areas of the construction industry. With the decline of Baby Boomers in the workforce (roughly 10K retiring every day), we will see not only a labor shortage of construction workers, but also a shortage in skilled business people. Therefore, skilled laborers of all ages and experienced business people (especially 35-45 years old) will be in very high demand.
Since Gen X has a considerably smaller population, we will see more Gen Y and Millennials filling this gap. These younger groups are also driving the population shift to certain urban cities where we will see housing growth, especially in the multi-family segment.
Affordable Luxury is the New Affordability
Yes, multi-family has typically been about affordability. Some would even say it was the “cheap” option for manufacturers to install their building products. This led those manufacturers to sell into multi-family only when they had excess capacity. But times — and buyer expectations — are changing. Affordability is still critical, especially given the demographic shift to younger home ownership and urban areas.
However, with the proliferation of the Millennial population, comes a growing expectation of the definition of affordability — cost effective options with more style, design and elegant functionality. Just look at the success of IKEA. The retailer builds its value proposition on “bringing affordable luxury to the masses,” and Millennials bought in strong to that platform.
But the multi-family segment is no longer just about affordability. More and more, there are designs created and built for those seeking a luxury option at a reasonable price. As a result, manufacturers need to view it as such when developing new, on-trend product solutions. It would also be wise for single-family home builders to take notice on how the multi-family community is leading the trends on innovation in space design and functionality.
Less (Space) is More
Another trend in multi-family construction is the push for smaller spaces. Affordability is directly connected to this movement. Trying to fit the bank accounts of the Millennials who are still trying to pay off their college tuition. The migration to urban areas, where space is very limited, is also a factor.
And the new consumer and homeowner have different expectations. For example, people only wanting to take care and manage smaller spaces. This new expectation is causing us in the industry to rethink how to use technology to enable homes to become “functionally large.”
This ever-evolving group of homebuyers want walkable communities and are spending more time outdoors. When they go outdoors, some are even pulling their small house behind them. We are seeing modular construction growing for many reasons, but primarily because it helps address affordability. It drives productivity, material efficiency and space optimization. You will see more builders turn to some level of modularity in their construction practices over the next few years.
The increasing urban population will also create more density, which will help address other issues we are facing like sustainability, water and power usage, as well as transportation requirements.
Building to Increase Healthy Environments
Yes, we are getting older and are expected to live longer than previous generations. Boomers are working longer, some because they can and in some cases, because they have to financially. But we are not necessarily healthier, especially the younger population. There are more drugs being dispensed for allergies, and there is an increased sensitivity to different foods, smells and noises. Some self-diagnosed issues as well as self-inflicted by the chemicals we put into our foods. All of this changes the dynamics of our outdoor environments, as well as the indoor environments we are building.
Expectations and requirements in all population groups continue to rise in heathy home environments. Builders are purposefully adding in healthier options to address our population’s increased reactions to environmental changes. Schools, multi-family housing and healthcare facilities are all looking for healthier environments for their families and residents. These health concerns are a driving factor in the firm a multi-family building owner chooses to work with.
The Power of the Customer Experience
Face it, we manufacture building products and we build structures ultimately for the homeowners or tenants who live in them. We should focus on them, at least. However, sometimes it seems like we are making products that our channel partners like or think will sell, or doing structure designs we think will win awards. In the end, if tenants are not happy, our businesses cannot sustainably succeed. Success all boils down to creating a relevant (and ideally unique to your brand) customer experience for those existing and prospective tenants.
Creating a great customer experience was the crux of the “The Next Frontier of Marketing” session Interrupt led with the aid of some very insightful marketing profession panelists from Crescent Communities, Toll Brothers, The Bozzuto Group and Gables Residential. The common thread through the panelists’ presentations was the importance of customer experience—finding that unique brand differentiator and embedding it into how you build your brand and marketing, how you organize and train your internal team, how you activate your brand at every touch point, and how you utilize data to enhance the experience and measure ongoing success.
Interrupt recently released “Creating a Killer Customer Experience”—a guide that helps you learn the true meaning of a great customer experience and walks you through the process of implementing an action plan. See our website to learn more or sign up for a CX JourneyPath™ Workshop.
With multi-family being a third of the residential market opportunity, and the momentum of new trends in innovation and design, manufacturers and the industry alike should take notice of where MF building is heading next.
If you are interested in growing your multi-family business, contact Interrupt at email@example.com to schedule a MF Summit