The digital nomad lifestyle is catching the attention of industries, which has them shifting toward either a subscription or membership based model.
December 20, 2021
By: Bobby Casey, Managing Director GWP
What seems to be a common theme behind the interest in this model is variety.
I’m not getting the same whiskey over and over. Instead, this club will make me try something new that I never knew existed.
I’m not having to plot out my meals every week. Instead, this subscription will send me meals for the week for which I provide a few things, but I don’t worry about the whole grocery list behind it.
They are doing this with clothes, make up, nutritional shakes, children’s learning projects, snacks from around the world, wine, coffee and tea, even subscription boxes for your pets!
Not only do they offer variety, they offer flexibility. Many of them let you reduce, add, pause or cancel any time. Customers like the convenience, businesses like the commitment.
One of the responses to Obamacare was no-insurance membership based medicine. People would pay a flat monthly fee, for unlimited visits to their clinic and receive basic services from a nurse, GP, or PA, who could also perform simple out-patient procedures.
Patients didn’t have to worry about insurance coverage or mounting co-pays on top of insurance premiums. And the clinics received steady retainers on a monthly basis. The services are a lot more personalized while the method of payment is streamlined.
Membership and subscription based models offer flexibility, variety, and often far less friction in getting what the customer wants to them in a prompt and convenient manner.
It might not surprise you to know that there are memberships to RV campsite networks. Thousand Trails is one of the most well-known. You pay a very low monthly membership fee, and gain access to all their RV sites. You stay 14 nights, you take a week off, you stay 14 nights again at another park.
Most RV parks expect short term stays. It’s designed with the domestic nomad in mind.
What if I told you that apartment developers are likewise looking at the possibility of creating a sort of network, where people can have short term leases and go to another in-network apartment for another term? What if apartment rentals looked more like time-shares? What if there was more flexibility in the use of the property such as the ability to put the unit up on a Vrbo or Airbnb?
This is the latest development to hit the real estate market. It’s in the talking stages, but the pandemic and shift to work-from-home has many in this industry taking a much more serious look at the prospects.
The National Multifamily Housing Council’s annual renter survey showed apartment dwellers are moving more often, would consider a “digital nomad” rental plan and support a loosening of restrictions on subleasing through Airbnb-type sites.
Apartment operators began to consider renter membership plans before the pandemic when digital nomads were a tiny slice of the renter market, [Rick Haughey, the Multifamily Council’s Vice President of Industry Technology] said. “The question now is how big a slice is that (today)?” he said.
In a typical year, most apartment dwellers move because they’re looking for a better deal or better amenities and community space, Haughey said. But of those who moved since the pandemic, 25% did so because their jobs shifted to remote work.
And 73% expect to continue working from home for the same amount of time or more next year.
Imagine property developers like Greystar or Olympus Properties. They have enough locations just in the US alone to offer flexible membership based contracts. After all, if they are going to move in 3 months anyway, it would make sense to try to keep it in the same brand of multi-family dwellings.
If they yield and let renters sublet as an Airbnb or Vrbo then it works for everyone. The property managers get their rents and profits, and the renter could make a little extra on the side too! The property maintains occupancy and the renter has greater flexibility on where they live and for how long.
Whether large developers offer a membership based program, allowing their tenants to move from property to property, or flexibility in the rental agreement itself, it would be another industry shifting to the member or subscription model.
It’s the best of both a la carte and volume buying, where the proprietor gets enough commitment to make it worth their while, but the customer has enough flexibility to accommodate their location independence.
Businesses are meeting market demand more precisely and with less friction. Unencumbered by bulky terms and unnecessary middlemen, businesses get closer to delivering what their customers want.
The hope is that the pricing will mirror normal monthly rent found on one year term lease agreements, which would make that option considerably more affordable than Airbnb or Vrbo.
I wouldn’t be surprised is we started to see flex-rental apartment sites crop up appealing to longer term interlopers.
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