AIM Special Report: The Flexible Leasing Draw
Apartment owners are finding value in offering renters a range of options and incentives.
Apartment owners experimenting with varied leasing options are finding benefits. Alternatives from short-term leases to payment plans to coliving are resonating with rental prospects, according to a discussion among large portfolio owners at the recent Apartment Innovation and Marketing Conference that was moderated by Airbnb for Real Estate Marketing Manager Melanie Rodriguez.
In fact, when Equity Residential conducted a survey to gauge interest in flexible leasing, 70 percent of respondents were favorable, according to company Assistant Vice President of National Marketing Kyra Lambo. And 50 percent said they’d be willing to pay an extra $500 upon move-in for flexible lease terms. To date, 1,500 of the REIT’s residents have joined one of its flexible rental programs, and they’ve shown a slightly higher retention rate than traditional renters, Lambo said.
“It seems to help with a stickiness in staying with Equity,” she observed.
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UDR has also experimented with a variety of flexible living programs. It has branched into other flexible offerings, including a biweekly payment plan that in addition to reducing the bite per payment allows residents to break their lease more easily if they decide to buy a house. So far, just 5 percent of residents have signed up for the plan, but it helps that they know it’s an option, affirmed Director of Sales Mackenna Mullins.
Coliving also offers greater flexibility, but it won’t work everywhere, cautioned Laura Stankovic, senior director of marketing at Greystar. Renting a bedroom/bathroom combination and sharing other living areas works best in dense urban markets where people are willing to compromise to be near work or in a desirable neighborhood. “I don’t think it’s for everyone,” she said. But Greystar has had success in markets like Baltimore and Boston.
Learn to share
While offering different living options in the same community can provide residents some peace of mind, it can also cause friction. That’s often the result of shared amenities, especially if they involve residents of one property having access to another. However, Sares Regis has found that hosting shared events that help residents get to know each other can mitigate that, according to Jenelle Shapiro, senior director of marketing. In fact, the resulting positive reviews have helped increase the company’s renter retention rate.
Residents can also be uncomfortable with neighbors renting their units out for short terms, creating friction with those seeking income when their apartment is otherwise unoccupied. While some municipalities have put limits on short-term leasing, some larger owners are embracing it, finding that it can differentiate their communities, especially among renters with a “more nomadic lifestyle,” Stankovic said. There are also revenue-share benefits for the property owner, Rodriguez noted.
As a result, some are pursuing a coordinated effort, partnering with Airbnb, Placemakr and other providers to better align residents’ efforts. And they’re addressing the fear factor head on.
Communicate, educate
Communication and education are big tools to this end, Lambo noted. The Equity Residential residents renting out their units average a 4.9 rating, a good indication their customers are not being disruptive. And the rental frequency hasn’t been as great as other residents imagine, she said, so it helps to ensure that’s communicated. Emphasizing the importance of education, Mullins suggested always starting with “the why.”
And vendor partners can provide the information you need. “Lean into your vendor partner. They will support you, provide data and metrics,” Shapiro said.
Those committed to expanding their programs are experimenting with rewards to encourage aligned efforts. Greystar began with two properties in 2022 and has since expanded the program to 270 properties across the U.S. and U.K. It’s encouraging the practice by building it into the company’s loyalty and rewards program, Stankovic said, and considering offering points that can be used toward high-value items like travel and discounts off rent.
Promoting such programs as part of your regular marketing efforts can differentiate your properties, Lambo said, calling them “table stakes.” Include it everywhere you market, she advised, and add a bridge to the property website. Integrate it into email drip campaigns as well as the resident app, Stankovic added.
Greystone has also developed a marketing playbook and put together a dedicated flexible living team to guide property-level staff on where and how to promote and to help keep their communications consistent.
