U.S. population growth is slowing and expected to continue declining over the next decade. At the same time, demand for multifamily rental units continues to be robust, a trend Fannie Mae predicts will continue over the long term.

Can both things be true at the same time? They can, say the professionals who keep a close watch on the demographic trends shaping the multifamily industry. Shifting demographic factors—including delayed household formation, aging renters, and lifestyle-driven mobility—are redefining who rents and why. And as developers and investors grow more savvy about parsing their rental pool and technology makes it easier than ever for REITs to align their portfolios using artificial intelligence (AI)-driven demographic strategy, they’re rethinking everything from geographical choices to unit mix to amenity strategies.

Younger generations are waiting longer to form households—the average marriage age has increased more than four years since 1990—while housing costs are driving outsized demand for rentals, says Roberto Casas, senior managing director for JLL. That means the renting population now spans a larger age demographic than it ever has, and this has been a big factor in pushing multifamily from 0% of the Open End Diversified Core Equity Index in 1980 to 32% today, he says.

“Aging demographics and structural changes, such as delayed marriage and a rise in the share of single households, are the biggest changes we’ve come across in both our proprietary data as well as third-party data sources,” says TJ Parker, senior vice president of market research and data analytics for multifamily investment and management firm Bell Partners. “On demographics, we are seeing a flattening of the curve across age cohorts, which means demand is spread out across both younger and older age cohorts.”

As mortgage rates decline, some millennials and Gen Zers will leave the rental market to buy homes, Parker says, but, at the same time, Bell is seeing more demand from older renters who are choosing the convenience of renting over the upkeep of owning a home. “But, of course, real estate is very local in nature,” she adds. “The demographic composition may vary widely across communities and different Bell markets, which adds complexity in terms of providing services that cater to those needs from a property management perspective.”

For Mary Cook, president of Chicago-based design firm Mary Cook Associates, getting demographics right means looking beyond things like average age and income. Cook’s team susses out “the who” of new projects by exploring the area’s key employers, figuring out where people are migrating from, and visiting nearby retail stores and coffee shops.

Cook says she realized, for example, that her design for a property located between Harvard University and the Massachusetts Institute of Technology in Cambridge, Massachusetts, had better be next-level tech savvy when she stumbled across a neighborhood coffee shop with an electric board that displayed how long her order would take based on an algorithm tracking how many people were in the store. For a property in Princeton, New Jersey, proximity to a pharmaceutical company that employed many people from East India prompted Cook’s team to include lock boxes in the mailroom for passports, visas, and green cards.

“The ‘who’ is what informs every aspect of our design, the strategy behind how we dedicate space, and how we prioritize space,” Cook says. “The aesthetic ends up coming last.”

Gen Z: Renting as a Lifestyle

On a macro level, Gen Z—which now comprises 27% of the workforce and 30.5% of all renters—is driving the rental market. Because this cohort had the unfortunate timing of starting their professional lives just as housing costs soared to unattainable levels, about 85% of them are renting, says George Ratiu, vice president of research for the National Apartment Association.

But young adults aren’t renting simply because they can’t afford to buy. Many simply prefer it. In a June poll, Entrata and Qualtrics found that 72% of Gen Zers said they believe renting is financially smarter than owning a home, 83% said renting helps them save for other priorities, and 37% said they prefer the ease of on-call maintenance over the burdens of home ownership.

This generation is also geographically nimble, much more willing than older generations to move in search of a better or more affordable lifestyle. They’ll pay a little more to live in walkable neighborhoods with parks, coffee shops, and restaurants, and they’re flocking to smaller, more affordable metros in the Midwest like Ann Arbor, Michigan; Lincoln, Nebraska; and Des Moines, Iowa—places their parents fled.

Developers are responding to Gen Z demand in these cities with amenity-rich properties in downtown hubs. In Des Moines, Double Eagle Development is building a $50 million, 202-unit complex on an urban infill site near restaurants and a growing entertainment district. In Ann Arbor, 4M recently opened a 216-unit, mixed-use mass timber complex powered by a natural gas fuel cell system and other environmentally friendly features that appeal to climate-conscious Gen Zers.

In addition to location and sustainability, these new developments are targeting tech-native, wellness-oriented Gen Zers with amenities like lightning-fast connectivity, coworking accommodations, and social spaces and programming that build belonging and address mental and emotional well-being. To counteract the amount of time this generation spends on screens, Cook says, Gen Z-focused properties “need to be really activated with all sorts of activity rooms to keep people more engaged with each other.”

Not Your Father’s Senior Housing

Gen Z is not the only flexible, mobile, and digitally fluent generation to embrace renting. Their parents and grandparents—baby boomers—are chasing many of the same amenities, including walkability, access to transit and public services, and climate-responsive and resilient design. As such, boomers have become a desirable growth market for luxury properties.

Make no mistake—the number of 80-plus renters is growing at ever-accelerating rates, pushing net absorption for senior housing to record highs. But Doug Ressler, manager of business intelligence for Yardi Matrix, points out that the pool of potential tenants for senior housing is limited to people who can afford the high price of assisted living. Younger seniors who can’t see themselves moving into age-restricted, health care-oriented housing until they’re 85—if ever—are a ripe market, Ressler says.

Adults in the 65 to 85 age range often have pets and may still be working. They want space, but they don’t want the hassle of maintaining it, which is why they’re a driving force in the growing build-to-rent single-family rental market, Ressler says. They’re also not averse to living among young adults in apartment complexes. “The nature of generational conflict is not near where it used to be,” he says.

“Boomers and Gen Z actually cohabitate pretty well,” Cook says, “because you don’t have the kid factor.”

This trend started to emerge in the early 2010s, when developers who built Class A urban apartments to capture affluent millennials realized a lot of baby boomers were moving in, too, says rental housing economist and consultant Jay Parsons. “That demographic is not necessarily looking for something that’s geared toward a senior adult,” he says. “They’re maybe looking for something that makes them feel younger.”

“Renting has become an increasingly popular option for active seniors who aren’t interested in age-restricted housing but seek a maintenance-free lifestyle in an accessible building,” says David Hovey, president of Optima, a company that designs, develops, builds, and manages multifamily communities in Arizona and Illinois. “With single-level homes and residences with elevators in particularly high demand and short supply, luxury rentals offer a practical and appealing solution with the flexibility and peace of mind to age in place.”

With the number of renter households headed by people 65 and older increasing by more than 1 million between 2019 and 2024, according to a Harvard University Joint Center for Housing Studies report, boomers are lucrative at both the luxury and affordable ends of the market.

“With the oldest baby boomers turning 80 in 2026—an age when more people turn to renting—a wider range of affordable rental options for older adults will be required to accommodate their changing needs,” the report states. “Renting will be an especially attractive option for older adults who want to age in their community, reduce their maintenance responsibilities, and access the shared spaces for social interaction and accessibility features more common in multifamily buildings.”

Read more on Multifamily Executive

Earlier this year, rental housing economist and consultant Jay Parsons parsed renter data released by multifamily REITs and found income levels rivaling those of middle-class homeowners—Equity Residential reported typical renter income of $169,000; Essex Property Trust, $131,000; and Camden Property Trust, $120,000—and rent-to-income ratios ranging from 19% to 22%.

This data proves that developers and policymakers need to update their perceptions about who today’s renters are and why they rent, Parsons says. “The bottom line is that there are a lot of people who are making good incomes and want to be renters.”

The Harvard University Joint Center for Housing Studies found that the number of renter households with incomes of $75,000 or more has risen 43%, to 13.5 million, since 2010. The number of affluent renters is also growing in 35 of the 50 most populous U.S. metros, according to a Redfin analysis of the U.S. Census Bureau, MLS, and county records. In San Jose, California, and Orlando, Florida, about 11% of renters are wealthy; in New York and Seattle, approximately 10% are, the analysis found.

Jessica Perri, marketing director for residential property developer and manager Habitat, says the assumption that people see renting primarily as a transitional phase before homeownership has shifted. More residents are choosing to rent long term because it better aligns with their financial goals, lifestyle, and desire for flexibility, she says.

“This shift has challenged us to think beyond traditional property management and to create communities where renters can truly put down roots, build connections, and feel invested in where they live,” Perri says.

Optima president David Hovey says renters by choice are drawn as much by a sense of community as they are to concierge support, in-home package delivery, and private chefs. Optima is meeting those needs with things like expansive residents’ clubs, rooftop decks, and reservable guest suites.

“For many, what begins as a practical and often temporary decision to rent evolves into a long-term lifestyle preference,” Hovey says.

Read more on Multifamily Executive