The freelance economy is reshaping the global workforce, propelled by technological advancements, a desire for work-life balance, and economic shifts. This transformative wave presents both challenges and opportunities for the multifamily housing sector. Multifamily leaders must now adapt to meet the needs of this rising demographic, primarily millennials and Gen Z, who value flexibility, community, and innovation in their living arrangements.
This guide outlines strategic insights and actionable recommendations to help multifamily owners and operators leverage the freelance revolution, enhance their business practices, expand their resident base without financial risk, and improve their NOI. By embracing the unique characteristics of the freelance economy, owners and operators can position themselves as leaders in an evolving market, offering apartment homes that cater to the dynamic lifestyles of modern workers.
An overview of the freelance and gig economy
The freelance and gig economy is rapidly reshaping the modern workforce landscape, marking a pivotal shift from traditional 9-to-5 jobs to more flexible, project-based employment. The preferences of younger generations primarily drive this evolution. Apartment List reveals that 20% of Gen Z identify as "forever renters," highlighting a broader trend towards flexibility in both work and living situations. With 52% of Gen Z professionals engaging in freelance work in 2023, addressing their needs is crucial.
These groups are gravitating more towards the advantages of freelancing, which include control over one's own schedule, the freedom to work from any location, and the chance to engage in diverse projects across multiple industries. Currently, freelancers represent 39% of the global workforce and forecasts indicate that by 2027, they could account for more than half of the workforce.
Challenges for renters and operators
The rise of the freelance economy also brings its set of challenges. Freelancers often encounter obstacles when applying for apartments due to their fluctuating incomes and the lack of traditional employment documentation, such as steady paychecks or employment letters from a single employer. This variability can make it difficult for them to meet the standard financial criteria set by properties.
On the flip side, operators face their own set of challenges. Assessing the financial stability of freelancers and gig workers is complex due to their non-traditional income streams, making it harder for them to gauge the risk involved in leasing to these individuals using conventional screening methods.
Multifamily living in the freelance era
In the era of freelancing, multifamily living has seen considerable changes to accommodate the evolving preferences and ways of life of an expanding portion of the workforce. For multifamily leaders aiming to manage these shifts, implementing change at existing properties or embedding them into new developments is essential.
By aligning with the dynamics of the freelance era, you can make your properties more appealing to this rapidly growing market, resulting in higher occupancy levels and enhanced resident satisfaction.
Strategic approaches for operators embracing the freelance wave
As the freelance and gig economy grows, multifamily operators are rethinking traditional practices and embracing new strategies to attract and support this evolving demographic.
Innovating applicant screening and financial assessment
One of the critical areas of innovation is in the screening and financial assessment of potential renters. Traditional metrics, such as a steady paycheck from an employer, often do not apply to freelancers with variable income streams.
Next-gen risk evaluation
Operators are now looking beyond conventional credit scores and employment verification. By embracing alternative methods, such as analyzing bank statements, tax returns, and long-term client contracts, property managers can better understand an applicant's financial stability. Technology can play a crucial role here, with AI-based underwriting tools offering stronger, more nuanced insights into financial behaviors and predictive income stability.
At no cost to owners and operators, TheGuarantors offers insurance products based on a risk model that looks at thousands of variables to predict renter default with 89% accuracy.
Enhancing property amenities and services
To attract and keep freelance workers, multifamily operators are also rethinking their amenities and services.
Tailored amenities
Properties are creating multifunctional spaces to accommodate blurred lines between work and home for freelancers. These include 24/7 co-working areas, robust high-speed internet access, and flexible communal areas for both work and leisure. For instance, 33 Bond Street in Brooklyn, New York features a co-working space called ‘HomeWork,’ designed specifically for the modern remote worker. Similarly, Ascension on the Bayou in Houston, Texas has introduced a business balcony, blending work and leisure to attract a like-minded community.
If the addition of co-working amenities didn't make the budget this year, consider lower-cost options like smart home technology or higher-speed internet as an amenity to increase curb appeal to this demographic of renters.
“Renters are seeking communities that align with their way of living and properties that can cater to that is where they will go.” – Lindsay Jacobs, Senior Vice President at RPM Living
Community building
Beyond physical amenities, fostering a strong sense of community is crucial. You can achieve this through curated events, workshops, and social gatherings catering to freelancers' interests. Such initiatives help combat the seclusion that can come with freelance work, offering residents valuable networking opportunities and a sense of belonging.
Expanding and protecting the resident pool
Inclusion and flexibility are key themes in expanding the resident pool and ensuring not only the community's vibrancy but also your financial stability and growth.
Lease guarantees and deposit replacements
Data from Upwork indicates that 44% of freelancers report earning higher incomes than traditional full-time employees. This strengthens the potential value these kinds of workers can bring to your properties, highlighting the importance of not overlooking their positive contributions.
At the same time, freelancers often face irregular income, but this doesn't have to be a barrier. By offering lease guarantees and a security deposit replacement, you can give conditional and declined applicants another chance at renewal and lower their move-in expenses, all while ensuring your bottom line stays protected.
Consider partnering with a company like TheGuarantors to streamline this effort. With the company’s Rent Coverage, Deposit Coverage, and Zero-Gap Renters Insurance products, this demographic can access homes they otherwise would not be approved for while you minimize losses from rent default, holdover, vacancy, damages, renter-caused accidents, and more.
Flexible lease options
Offering shorter lease terms provides the flexibility required by freelancers and traveling professionals, like nurses and doctors, who need to relocate or travel as their work demands change. By connecting with organizations dedicated to supporting mobile workforces, you can access a steady influx of renters, ensuring consistent occupancy. This approach helps meet the needs of many workers and makes it possible to charge a bit more for these flexible leases, balancing out the costs of having tenants move in and out.
One company that has strategically tapped into the growing demand for lease flexibility is Greystar, which consistently ranks #1 on NMHC's 50 largest apartment managers list. Greystar teamed up with Airbnb in 2023 to introduce its Resident Hosting Program, enabling residents to host their apartments on Airbnb. This initiative has proven successful, with Greystar residents earning over $3 million in income from hosting and its properties raking in nearly $1 million from their revenue share.
"We are enabling renters to tap into flexible living arrangements, while providing building owners and operators full transparency and oversight of the hosting activities happening in their communities." – Mike Clow, Executive Director at Greystar
By adopting these strategic approaches, operators can better serve the needs of freelancers and gig workers, ensuring their properties remain competitive and desirable in the evolving landscape of work and home life.
Capitalizing on freelance and remote work trends for success
As we navigate through 2024, multifamily operators should stay attuned to this evolving landscape of the freelance economy and how the shift toward remote work influences different habits.
Navigating new freelancer hotspots
The Midwest region, specifically West Michigan, is emerging as a highly lucrative market for multifamily investments. Thanks to low unemployment and high rent collection rates, it's an attractive market for long-term investments, especially amongst this target demographic.
A May 2023 Zumper report highlights the Midwest and the South as regions with some of the best cities for those embracing the remote working lifestyle, as they're often on the move. Leading cities for remote workers include:
Columbus, Ohio
Portland, Oregon
Kansas City, Missouri
Houston, Texas
St. Louis, Missouri
Chicago, Illinois
Cincinnati, Ohio
San Antonio, Texas
Detroit, Michigan
Denver, Colorado
On the flip side, cities in California, New York, and Florida are considered less appealing to this demographic, primarily because of their high cost of living. Multifamily operators who diligently monitor these trends and incorporate insights into their strategic planning for lease-ups, property investments, and acquisitions are poised to maintain a competitive edge.
Staying ahead with strategic insights
To effectively navigate the latest trends and meet the dynamic needs of this renter group, consider the following strategic approaches:
Stay informed with Google Alerts:
Keep up with the latest trends by setting up Google Alerts for terms such as "digital nomad moving trends," "freelance economy and multifamily living," or "remote working trends." This simple step takes less than five minutes and ensures you receive timely updates and information directly to your inbox.
Engage in online communities:
Connect with your audience by participating in online and social media forums frequented by freelancers and remote workers. These platforms offer direct insight into this group's changing needs and preferences. A quick way to get started is by following the hashtag #FreelanceChat on X, where you can read Q&A amongst freelancers.
Leverage analytics for deeper insights:
Understand your residents better by investing in analytics tools that delve into data. Analyzing resident behaviors or understanding what percentage of them are freelance workers can help you anticipate their needs more accurately.
Monitor competitor strategies:
Learn from the market by keeping an eye on how competitors are adapting to these evolving trends. Observing successful and less effective strategies can provide solid insights, helping you refine your tactics to attract more freelance workers to your properties.
Dive into industry research:
Expand your knowledge by engaging with industry research, reports, and studies on remote work trends and the freelance economy (like this one). This broader understanding of market shifts allows you to position your properties more effectively, catering to the preferences of modern residents.
By adopting these approaches, multifamily operators can ensure they are well-positioned to attract and retain the modern resident, capitalizing on the opportunities presented by the freelance and gig economy revolution.
The path forward
Looking ahead, the expansion of the freelance economy welcomes a transformative era for multifamily housing, emphasizing the need for flexibility, innovation, and community. These elements are no longer luxuries but fundamental to thriving operations. Multifamily leaders should embrace the freelance revolution as an opportunity to stand out, innovate, and expand in a competitive landscape.
Understanding that freelancers and gig workers could soon make up more than half of the workforce, the time to start adapting is now. With the right strategies and partners in place, it's possible to overcome the challenges of qualifying these kinds of residents, mitigate your risk as an operator, and secure a large (and qualified) new pool of prospective residents.
Feel free to reach out to TheGuarantors if you have questions or would like to explore how you can open more doors for freelance and gig economy workers with our industry-leading insurance products that will also help mitigate your risk of bad debt. For more information, please visit our website or reach out at moreinfo@theguarantors.com.
“Working with TheGuarantors enables us to increase occupancy without fear of increasing our bad debt.” – Salil Sheth, EVP Property Operations at Ironstate Properties
By applying the insights from this guide, you can make your properties more appealing to contemporary residents, boost financial outcomes, and foster vibrant communities ready for the future. Remember, you're not doing this alone. By working together with experts, tech partners, and your colleagues, you can change your properties into places where today's workers want to live, fostering long term success.