The Urban Land Institute Terwilliger Center for Housing and real estate advisory firm RCLCO collaborated on a report entitled “Family Renter Housing: A Response to the Changing Growth Dynamics of the Next Decade” that postulate that families will become a much more dominant demographic in the multifamily rental housing market in the next decade.

With multifamily development on the rise in Orange County due in large part to renters seeking lower costs and a more suburban lifestyle, this report paints a picture that young professional millennials may not be the only demographic residential developers should be targeting here and elsewhere.

The report notes that as the millennial generation has come of age, the development community has largely responded by focusing on its youngest members, which are often single, urban and transient. These individuals have driven the construction of the luxury rental apartment buildings that now dot the rapidly changing suburbs of most major metropolitan areas.

The RCLCO-ULI report notes new development has largely neglected one of the largest and most critical renter segments—families.

Going forward, families are likely to play an even more important role in the rental housing market. Although the number of families living in the United States remained relatively constant during the past decade, this demographic is poised to experience significant growth in the 2020s and beyond as more and more millennials have children, the report states.

“Similar to these demographic trends, housing preferences are also shifting in a way that is supportive of family-oriented rental development. Together, declining homeowner rates and rising housing costs are spurring a need for—and a business opportunity to build—new and interesting forms of rental housing that target a broader range of households, including many families,” according to the ULI.

The report states that there are a growing number of households with children living at home with them and goes on to say that families are no longer limited to the traditional archetype of two parents with one or more children. Single-parent and multigenerational households are becoming increasingly common, and these groups have vastly different housing needs, prompting an important question: What is family-oriented rental housing? The report defines it as housing of any density with two—or ideally three—bedrooms.

“The development community is beginning to react to this opportunity in a number of ways. From suburban townhouses to multifamily apartments, family-oriented rental housing is starting to emerge across the country,” the report states. “Although rarely explicitly marketed to families, these communities offer floor plans, amenities, and locations that are especially attractive to households with children. More important, these family-friendly rental options have been built in relatively small quantities this economic cycle, despite their increasing demand.

There are a number of reasons why the supply of this type of housing is not equaling the demand for family-oriented rental housing. The ULI-RCLCO report points to a number of barriers that stand in the way of their development, including developer resistance and unfamiliarity, as well as regulatory obstacles and limitations.

“Moreover, this product is actually disappearing in many cases, as developers convert, subdivide, and redevelop existing family housing into units less appealing to households with children. This dynamic highlights the risk that family renters face, as well as the opportunity to better serve these individuals,” according to the report.

The report authors— Adam Ducker, senior managing director, Jake Ross, vice president and Monica Corley, analyst with RCLCO—point to U.S. Census data that clearly demonstrate the emerging force families will have on the rental market in years to come.

The U.S. Census Bureau expects the number of people between the ages of 30 to 50—the prime age range in which people have children—to grow significantly more than it did during the last decade. While the number of these households increased by roughly one million between 2010 and 2020, it is projected to grow by approximately eight million between 2020 and 2030.

To see the full “Family Renter Housing: A Response to the Changing Growth Dynamics of the Next Decade” go to: https://www.rclco.com/publication/family-renter-housing-a-response-to-the-changing-growth-dynamics-of-the-next-decade