Analyzing tenants’ preferences and the rental housing market Rental property owners are very knowledgeable about rent levels and vacancy rates in their buildings and surrounding area. However, it can be advantageous to have more data on tenants’ wants and needs, especially during a pandemic, as it will help with providing a better rental experience. This information is essential for keeping and attracting good tenants. RHB Magazine analyzed data acquired from Informa Canada’s annual Canadian Multi-Res Tenant Rental Survey, which polled approximately 36,000 Canadian rental tenants in 2020 to understand their preferences and identify trends. Last year, questions focused on preferences, amenities, programming, lifestyle choices, technology, and operations. The current survey prioritized COVID-19, including more detailed questions on how tenants felt about various issues before and during the pandemic. To collect the data, Informa Canada partners with rental property owners and managers to distribute surveys through their portals, newsletters, emails, flyers, and other media. It also conducts independent outreach through social media and other channels. Members can benchmark tenants’ responses against market responses to help evaluate tenants’ satisfaction with services and amenities, as well as guide their decision-making. The 2021 survey expanded its reach to include more market segments, including students and condo renters. Questions dove deeper into specific issues, such as tenants’ reasons for staying or leaving their current units, preferences around specific features, and changes in behaviour due to the pandemic. New questions were added since 2020, including tenants’ preferences about retail spaces in their building, gym use, transportation, communications preferences, and more. Answer options were also updated to accommodate changes, such as new technology options. The survey just concluded with more than 36,000 resident responses, providing Informa Canada with a five-year data history of about 100,000
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individual tenant responses to more than 200 questions. “The survey results, which will be made available for purchase in October, will be presented at the Canadian Apartment Investment Conference, which takes place in a virtual format on September 22 and 23,” said Sarah Segal, Director, Real Estate, Informa Connect. “CAIC enables owners, managers, developers, investors, and lenders to network and gain valuable insights on major trends, issues, opportunities, and strategies in Canada’s multi-unit residential market.” To follow are some key findings from the Canadian Multi-Res Tenant Rental Survey, as well as general comments on the market from our research and interviews.
Who are the tenant respondents? Tenants span all walks of life, age groups, family situations, and backgrounds. Demographics can vary widely between buildings located in different neighbourhoods, cities, and provinces. Most survey respondents were between the age of 31 Age of Respondents 71+ 61-70 55-60 51-54 41-50 31-40 26-30 25 and under 0%
and 40 (27 per cent), with more than 60 per cent under the age of 40. More than 40 per cent of the tenants who responded were single. Nearly half (46.1 per cent) were employed full time, while slightly less than 20 per cent of those surveyed were out of work due to COVID-19.
What does the rental market look like going forward? During the pandemic, many renters vacated downtown cores and small apartments for more space in small towns and suburbs, where they could get more space for a lower or equivalent monthly rate. This led to higher vacancy rates in some downtown cores, which drove down market rents in select parts of the country. Now, as people are returning to work, tenants are returning to city apartments and rental condos, particularly on the fringes of downtown where the units tend to be somewhat larger than in the core. Millennials and other young renters are looking for their own space after being cooped up with their families for extended periods. A rise in leasing rates will drive down vacancy rates, with average rents expected to move upward. Looking forward to 2022, technology will continue to play an important role in tenants’ lives and the rental housing experience. The pandemic fuelled numerous innovations, encouraging people to adopt new technologies and approaches. This includes how tenants search for and view properties, communicate with property managers and owners, shop and receive packages, and work from home. As we eventually move on from COVID-19, there will be changes in tenants’ activities and preferences, which could affect the level of interest in outdoor spaces, in-unit amenities, and desired building location. “It’s great to see that tenants overall were satisfied with how property owners and managers handled the pandemic,” said Segal. “They were pleased with the level of communications with management, as well as how they approached restrictions and maintained the buildings during this time.”
What types of rental properties are in demand? While smaller units make up the majority of the rental market, on a year over year basis, larger units (i.e., three- to five-bedroom units) are in greater demand. There is a significant increase in searches and views for four-bedroom units. There is also reduced demand for one- and two-
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bedroom units. Rental demand is increasing in secondary and tertiary markets, since many people are working from home and not worrying about commuting distance, choosing space and cost savings when looking for a place to rent. Lifestyle preferences, rather than proximity to transit and work, is driving tenants to rental spaces in outlying smaller towns and cities.
How important is building location to tenants? Rental property owners have no control over the neighbourhood amenities. However, knowing what matters to tenants will help with promoting what matters to attract and retain tenants. Safe, clean neighbourhoods and buildings will always matter to tenants, as well as being close to amenities that would make their lives more convenient or enjoyable. “In 2019, the building’s proximity to work or school was the most important factor, followed by its walkability, or location relative to retail and neighbourhood amenities, with rental amount being third most important,” said Segal. “However, in 2020, those numbers shifted, as building location took a back seat to rental amount, which became more important than proximity to work or school and walkability.”
What features and amenities are important to tenants? Even after the lockdowns ended, many tenants were spending more time at home, particularly those who were required to work from home. This has led to some shifts in what was important to tenants with respect to features and amenities. Tenants are most interested in having a balcony or private outdoor space, natural lighting, soundproof walls, a bathtub, and a dishwasher. High-speed Internet and space to work are also highly desirable. Renovated or high-end kitchens are still high on the list, but interest has fallen. There is also interest in elevator access and having air barriers between units. “People spent a lot more time in their units during lockdown, so they tended to pay more attention to the quality of their living space,” said Segal. “COVID-19 changed what tenants valued in their personal space. There was greater focus on the types of features they had and the quality of those features.” Tenants have also shown sustained interest in building programs, which is partially due to the inability to use some building amenities, but also
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because there is demand for the ability to interact with others. The survey showed that respondents were most interested in social events, yoga and Pilates classes, cooking classes, health and wellness events, and the ability to volunteer.
What do tenants want in outdoor space? Outdoor space has always been important to tenants. Around 57 per cent of tenants have access to outdoor space, and about 45 per cent would never rent a unit that does not have private outdoor space (such as a balcony or a patio). Feelings about outdoor space have changed due to the pandemic. The percentage of people who wanted a private balcony or a premium shared outdoor space increased during COVID-19. How did your feelings change about outdoor space? 40% 35% 30% 25% 20% 15% 10% 5% 0% I wanted a private I did not want luxury I did not care either way I wanted shared luxury balcony but was fine with shared space and only / Outdoor space at my outdoor space over my premium shared outdoor wanted a private balcony building was not own small private space important to me balcony Before Covid-19
How did tenants manage packages during the pandemic? Online ordering is prevalent, and it makes sense for rental property owners and managers to adapt to how tenants shop and live. Setting up an automated package locker system would enable tenants to safely receive packages at their building. However, nearly two-thirds of respondents said their building does not have an automated package locker system, even though they would want one.
Survey findings pre-pandemic and during the pandemic paint an interesting picture. The percentage of people purchasing groceries alone, as well as groceries and goods, increased during COVID-19. More people overall shopped online during the pandemic.
How effective are virtual tours in making rental decisions? Virtual tours became a necessity during the pandemic, as potential renters needed a safe way to view units for rent. While the technology has improved immensely and helped rental properties fill their empty units, approximately two-thirds of respondents stated they would still need to visit the rental property in person before making a
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Younger cohorts more comfortable making a rental decision based on a virtual tour
80% 70% 60% 50% 40% 30% 20% 10% 0% 25 and under
I am open to virtual property tours but I would need to visit in person before making a decision I do not like virtual property tours and will only rent a property if I can see it in person I like virtual property tours and could make a decision based on one
decision. Less than one-quarter of respondents did not like virtual property tours and would only rent a property if they could see it in person. There was a direct correlation between age and the percentage of people who liked virtual property tours. The younger the respondents, the greater the likelihood that they would rent a property by using a virtual tour alone. Respondents under the age of 25 made up the largest cohort of people who liked and would make a rental decision using solely the virtual tour. The percentage decreased almost steadily as the age of the survey respondents increased.
What do student renters want? There’s an interesting difference in students’ preferences for student housing. More than 70 per cent prefer to live in new purpose-built rental. However, the majority of those respondents would prefer to be in a rental property operated by a third party rather than one operated by their school (41 per cent versus 32 per cent). Nearly half of the respondents made a decision on the property based on the available amenities, and continue to use and value them today. “Even though most students were living, or wanted to live, in new purpose-built rental, looking post-graduation, about 90 per cent of students believe they will be living in a rental property that has the same or higher quality,” said Segal.
Conclusion Having access to more information on tenants’ wants and needs will assist rental property owners and managers with providing a better tenant experience. The Canadian Multi-Res Tenant Rental Survey and other sources of tenant data will provide key data and insights that can help with adapting to tenants’ changing needs and preferences, as well as attracting and retaining good tenants.
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