Before the pandemic, the long-term rental market’s demographic was fairly well defined. It was made up of business travelers on location for an extended but temporary period. Consultants, corporate travelers and people relocating for business needed a place to stay while they found more permanent accommodations.
That all changed quickly as national borders started to close, flights were grounded and the entire professional workforce re-oriented away from in-office and in-person work and to work-from-home as the new normal. It was a huge transition, but on the whole, the market has held up. One interesting perspective on that market comes from Nestpick, a platform for long-term and furnished apartment rentals. As its CEO, Omer Kucukdere told PYMNTS, the change didn’t translate to trouble for the business. Though it saw some declines, particularly early on in the pandemic, by summer Nestpick was up to bookings that were 50 percent higher in the United States than they were before the pandemic began. The long-term rental customer did not disappear, he said, they just changed form.
“Clearly with the pandemic and work from anywhere, a lot of people decided to do longer-term travel without having to take vacation days,” Kucukdere said. “Our back-end growth was mainly driven actually by people that are spending a couple of months in a different location — a nearby location in most cases that they are driving to and working from that location.”
And while many of the changes the pandemic has wrought will be temporary, and Kuckdere does believe they will see the return of those consultants and corporate relocators someday soon, the market is now a very different place than it was before the pandemic, particularly in terms of how Generation Z consumers prefer to live and work. For them, he said, the future may be a rather nomadic destination.
What The New Long-Term Customer Wants
The first rule of real estate that nearly everyone knows is that location (location, location) is pretty much everything. And though not something Kucukdere says he is ordinarily inclined to list as an amenity, it has become one this year as consumers have been hunting more space to hunker down in.
“San Francisco in 2019 was one of our top cities, but in 2020 in the midst of pandemic, coastal Orange County or the cost of Florida was where everyone wanted to be,” he said. “We had 90 coastal areas that got twice as many bookings than San Francisco.”
They saw the same in New York where people eschewed the city in favor of Westchester County and many once very hot urban metros. Consumers, he said, showed a great propensity to pull up stakes and head out to suburban and even rural areas for long stretches, with most reporting they were looking for a bit of breathing room. And that propensity for space was apparent in most of the features consumers were searching out — multiple bedrooms, dedicated office space, in-unit washer-dryer systems.
And, because their temporary homes were the locus of a lot of working vacations, Wi-Fi access and quality were uniquely important in securing bookings on the platform.
The challenge of the period, he said, is making sure smaller property managers are digitally on board. Big players such as Airbnb, Booking.com and others came into the pandemic digitally wired and ready to pivot to collaborating with a firm like Nestpick. Smaller property managers — in many cases holding an amazing supply of locations perfect to consumers’ needs — often were ready and are reliant on aggregators like Nestpick to help them across the digital divide.
And it’s a divide every manager needs to get over now, he said, because the next generation of tenants — Gen Z — are going to expect and demand it.
Meeting The Next Generation
As millennials and Gen-Xers have flooded out of cities, either temporarily to long-term rentals or permanently to new homes in the burbs and beyond, Kucukdere is not worried about the fate of the cities they leave behind. There are Gen Z consumers, he said, who aren’t going to move to the suburbs and are eagerly awaiting to step in and take their place.
“They still do care about fun,” he said. “They still do care about being close to like-minded people. They care about being in a city that is fun and that has restaurants, bars and going-out experiences. I think those are kind of things, a vibrant culture in a city is what they still going after.”
Their elder millennial siblings starting families are relocating, but there is no reason to believe younger Gen Z consumers will follow. In fact, he said, those Gen Z consumers, in the era of work from home, may not just choose to live in a city — but in a few cities each year. The pandemic, he said, has opened up a whole new world for workers who perhaps aren’t looking to sign a single long-term lease in one city each year when they could instead winter in Miami, spend the spring in New York City and summer in San Francisco. When their work follows them, he said, that becomes an option, and one he believes an increasing number of younger consumers will act on.
“I think flexibility for remote workers is just a thing that is happening,” Kucukdere said. “It’s our job to figure out as a platform how to make that digitally, smoothly and seamlessly for customer and property managers.”