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Different rental property types cater to households of varying needs and incentives. An expanding family that requires more living space and values access to quality public schools will consider a much different set of rental housing options than a new graduate moving to an expensive downtown district that mixes workplace proximity with a vibrant social scene. Naturally, with distinct differences in tenant mix by property type, there are also sizable differences in the average length of occupancy.
In this data briefing, we will explore data from the Census Bureau's 2023 American Community Survey, uncovering how substantially the length of tenancy trends differ by rental property type.
Data Findings
Large multifamily properties, defined here as structures that contain 50 or more rental units, have the most transient renter mix. In total, 30.5% of rental households in large multifamily are on their first lease in the unit — the highest share of any property type. Similarly, only a slim majority (54.9%) of large multifamily households have lived in the same unit for longer than two (2) years. Moreover, the share that has lived there for longer than five (5) years is only about a quarter (27.6%) of households — the lowest mark of any rental property type.
The tenancy trends for large multifamily properties depict an occupant base that turns over frequently. These properties tend to be in dense urban centers and are more likely to support high levels of amenitization. The units are also typically smaller and more expensive on a per-square-foot basis.
Small multifamily buildings, which are properties that contain between five (5) and 49 rental units, serve a slightly less "on the go" tenant base. The share of small multifamily households on their first lease sits at 28.6%, with the share making it longer than two (2) and five years (5) totaling 58.3% and 29.6%, respectively. These types of properties tend to span from the dense urban core to slightly beyond. On average, they are less expensive per square foot and more spacious than large multifamily properties within the same metro.
Note: For a detailed look at the investment trends within the small multifamily sector, see our latest report, published with our partners at Arbor Realty Trust, here.
Two-to-four-unit properties, which sit further outside of downtown centers than their multifamily counterparts, see a step up in the longevity of their tenancies. Less than a quarter (23.9%) of these renter households are on their first lease, while 64.5% have lived there for longer than two (2) full years. Further, 35.6% of households have lived in their unit for more than five (5) years — 6.0 percentage points higher than small multifamily and 8.0 percentage points more than large multifamily.
Finally, single-family rentals (SFR) support a base of occupants who are more likely to have set down roots. Only about one-fifth (21.7%) of SFR households have lived in their current unit for less than a full year. Further, a healthy majority of SFR households (67.3%) have at least made it to their third lease — the highest mark of any rental property type. The share of households that have remained in place for over five (5) years is a weighty 38.8%. On a relative basis, an incoming SFR renter is roughly 40% more likely to turn into a five-plus-year tenant than an incoming large multifamily renter.
According to our previous research, SFRs are more likely to contain children within the household than any other property type — a significant factor influencing moving and lease renewing decisions.
The Bottom Line
In short, these data indicate that tenancy durations vary significantly across property types. Operators who understand their occupants' renting lifecycle are the ones best equipped to manage their assets. Whether through the lease term, pricing, or some other option lever — optimization strategies can be as unique as the tenants themselves.
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