By Suzann D. Silverman
Multifamily occupancy stood at 95.5 percent at the end of June, according to Yardi Matrix data, with rents continuing to climb, though at a reduced rate from the headier years of the post-recession recovery. Still, new construction has not yet hit its anticipated slowdown, with 360,000 units expected to be delivered this year, a high for this economic cycle. New product means new competition, and for older units in particular, that competition can be tough.
How to compete? Concessions: maybe. Improvements: quite possibly. Amenities: increasingly necessary. In fact, a recent study from Village Green Apartments found that renters are extremely focused on amenities. When searching for an apartment, prospective residents ranked “community environment” among their top three criteria, the study found. And high-end amenities came in fourth on the list of most important elements needed, only following “hominess,” a fit with their lifestyle and online maintenance requests.
Furthermore, preferences are shifting again: Not only are traditional offerings like a pool, dog run or gym not enough to win over the seasoned renter, formerly trendier requests like dog-washing stations are giving way to a preference for yoga and Pilates space, 24-hour coffee stations, ride-sharing and Uber pick-up areas and community-bonding events—especially among the giant Millennial demographic, according to responses to a recent MHN-Kingsley Associates survey.
But amenities are not the only means to attract residents. More mundane upgrades are also attention-getting, whether they address safety, comfort, efficiency or even just curb appeal. Take Wheaton Center in suburban Chicago. When Draper and Kramer Inc. purchased the 42-year-old property in 2014, it was 70 percent occupied. Following a two-year renovation effort that included everything from structural repairs, a roof replacement and new windows and balcony doors to redesigned landscaping, improved stormwater drainage, updated finishes and increased amenities, the asset has achieved 93 percent occupancy. Other investors and developers have been similarly creative with good results, as we portray in “Curb Appeal,” a set of three case studies including Wheaton Center.
Of course, the quality of property management shows through regardless of the number of improvements made or exercise classes offered. That ranges from cleanliness of common areas to secure entryways to good lighting. And as more interactions with residents are conducted electronically—from the application to rent payment to maintenance requests—it means better protection of their information.
Ultimately, then, the best approach mixes old school with new wave. And the art lies in finding the right balance.
Originally appearing in the September 2017 issue of MHN.