The “Graying” of Chicago Renters

Source: Original data and graphic above sourced from Goldman Sachs Investment Research

Chicago Renter Pool Seeing More Older Renters, Fewer Fresh Out Of College

Nationally, while millennials have become the largest generation, we have also seen an increase in baby boomer renters, a cohort that will reach an estimated 20 million by 2020 (JCHS 2016). In the Chicago city limits, the total number of renters increased by 6.6 percent from 2011 to 2016, a net gain of more than 50,000 individuals according to the U.S Census Bureau. However, this growth has not been uniform across all age cohorts.

Change by Age Cohort

Chicago has seen strong growth in both the young professional (25–34 years old) and middle-aged (35–64 years old) cohorts, representing the lion’s share of renter growth from 2011 to 2016.

*This is estimated data aggregated based on the official city boundaries of Chicago and Suburban Collar Counties. U.S. Census, American Community Survey.

Meanwhile, the number of renters younger than 24 years old (renters fresh out of college) declined sharply in this six-year window.

Strikingly, while the retiree cohort (65+) did not have nearly as large of a net gain as younger cohorts, its percentage growth was striking. This suggests that baby boomers are renting more than they, or previous generations, have within this age bracket.

Key Takeaways:

  • As the number of older renters increases, site selection and amenities should be designed to appeal to this segment: While shared amenity spaces such as gyms, kitchens, lounges and the like have been hugely popular during this past cycle, these were focused on fresh, millennial renters deeply immersed in the sharing economy. A change of amenity focus may make certain product stand out to this older type of renter. Baby boomers are often choosing to rent as a flexible alternative to home ownership, with a closer proximity to family, community and/or work. Unit sizing and in-unit amenities that keep a former homeowner in mind can go a long way to attracting this type of renter.
  • There will be fewer renters coming directly out of college, due to both economic and demographic reasons: As rents plateau at these high watermark levels, younger (and usually less financially able) renters will continue to be forced out of the rental market. The stigma against living at home with parents after college has lessened, particularly in markets where rents have been prohibitive. These renters will enter the market later in their twenties than their forebears have. Even neighborhoods that have traditionally been magnets to new college graduates have seen a drop in young renters this past year: Logan Square has seen a 19.8 percent drop in the latest ACS 1-Year Estimate (older age cohorts increased during the same amount of time.) Additionally, this renter cohort is in the process of transitioning from millennial to Gen Z — a smaller generation that will likely have different tastes and interests than the millennials of the past cycle.