Second-Act Leasing: Apartment Rebranding Strategies That Support NOI

Multifamily economists predict that apartment starts could decline by as much as 20 percent in 2024 due to higher interest rates, fewer loans and a shortage of parcels for new projects. Many investors are turning to redevelopment and repositioning existing apartment properties. But figuring out how to successfully compete against the supply of sexy Class A construction that recently flooded the marketplace is easier said than done.

That’s where rebranding comes in. It can be a tricky task. But apartment marketers that start with an honest appraisal of the community’s personality and reputation and bring all stakeholders to the table early in the rebranding process can help multifamily assets enjoy a successful second act.

Time for a Change

“It’s been a wild decade of new construction in every major metropolitan area and even in secondary and tertiary markets,” said Kim Ziereis, co-founder of Après Creative Group, an agency that creates branding packages for ground-up developments and repositioning projects. “New construction has dominated and has pushed vintage properties to update their offerings to attract and retain residents.”

There are tremendous opportunities for vintage properties to thrive when they approach redevelopment with the right know-how. But when there’s not a clear branding strategy, it’s more than a missed marketing opportunity—it can actually negatively impact NOI. The team at Primary, a creative agency that provides “place” marketing and property branding, summarized all that’s at stake in a recent blog post:

“Imagine you’ve purchased or owned a multifamily apartment community that was built when Ross and Rachel were a thing, and it hasn’t been updated since the Friends finale. Updating the clubhouse, investing in state-of-the-art amenities and finishes, and hiring an interior decorator are the obvious fixes. But just like a tie makes the suit, the brand Identity of your apartment community sets the tone, providing the flair and personality it needs to stand out in the neighborhood and among the competition.”

Brand identity includes everything from the logo and color palette to the brand positioning and taglines. It might include changing the name of the property. A successful apartment rebrand will feel fresh to prospects as well as authentic to the surrounding neighborhood.

Know the Why

There are several reasons for rebranding a community, including competing with new construction, shaking off an outdated persona, turning around a negative reputation and increasing NOI. Frequently, it’s all of the above. “A property’s reputation is as influential as price,” Justin Godwin, director of marketing & communications east at Cushman & Wakefield, explained.

Godwin added that according to a Harvard Business Review study, one star in a five-star rating system can affect revenue between 5 and 9 percent. “That is huge, and our owners know this,” he said. “So we take into account reputation awareness when making the decision to rebrand.”

One of the most common reasons for a rebranding effort is new ownership. “If the community has a less-than-ideal reputation or negative reviews, rebranding can help. By adopting a new name and website, the SEO can be reset, offering a fresh start and a chance to elevate the community and attract a better tenant base,” Lisa Landry, CEO of Landry Designs, said.

Or it might be time for an update. The current name and logo might be outdated or not aligned with the owner’s vision for the property. Sometimes the community’s appearance needs to be modernized. “Refreshing dated exteriors and interiors can make the property stand out from competitors in the area,” Landry added. “If the property is underperforming, rebranding can be an effective strategy to enhance its appeal and improve overall performance.”

After the Napkin Sketch

Investing in branding isn’t cheap, and it requires a huge time commitment. Après Creative Group has worked on post renovation rebranding, where the vision is already set and then the client realizes they should probably get a new logo to match the new situation. But the best outcomes happen when the creative agency is brought in at the very beginning.

“Even if all you have is a sketch on the proverbial napkin, that’s a good time to bring everyone together,” Ziereis said. “We take in information from a different perspective, and we can start to manifest (your ideas) into visuals. The ownership group and developer are the vision holders, and know what the project will look like from the outside bones to the inside bones. When everyone is on board, we call it ‘concurrent magic.’”

She explained that the operations and onsite teams are the most important to have in your rebranding project because this is where your brand lives and breathes and is executed. The marketing experts are the ones who create brand awareness and get people to come to the property and get the word out. And then there are the branding and design experts. “We’re the strategy visualized,” Ziereis said. “Our brains work on pictures and colors. We sit and listen and make it come to life for their residents that currently live there and potential residents.”

Godwin agrees that the best rebranding magic happens when many voices are invited to the table. “It’s the ideal scenario,” he said. “Each voice has their own individual angle. The developers are looking at it from their design point of view. The operators and ownership are looking at it from a budget point of view. The onsite team is thinking, ‘How can I sell this?’ and the marketing team is saying, ‘How can I make this look pretty?’”

Godwin also thinks it’s incredibly important to get property teams involved early in the process. Let them take ownership and listen to their input. That helps them feel like it’s their personal project, as well. When they are invested, they get excited, and they will pass that excitement on to their prospects.

“We’re talking about repositioning assets that have already been built, so you also want to get your current residents involved in the decision-making process,” Godwin noted. “What would they like to see? What would be an ideal amenity space for them? Sometimes we don’t see the forest for the trees. Use a survey tool or actually talk to your onsite people and find out what your residents are looking for in the renovation.”

Maximizing Investment

Rebranding apartments is like hitting the reset button. And a rebrand that focuses on signage, website and marketing collateral without also taking into consideration the interior design of the property is absolutely a missed opportunity, according to Stacey McLoughlin, principal of Catalina Design Group. “It needs to be a team effort,” she said.

“Make sure that the interiors tie in with everything that’s going on from the marketing to the signage to the landscaping. We want to maximize the client’s return on investment,” McLoughlin added. With this in mind, Catalina Design Group does market research and gets to know the comps in the area as well as the neighborhood to design the project for the specific resident who will be living there. “In the meantime, we’re collaborating with the marketing team to make sure that everything’s going to be cohesive,” McLoughlin said.

As far as color palette, if the apartment community already has branding in place, the interior design team reaches out to the marketing team for those materials to make sure the colors and the style are in sync. According to McLoughlin, some multifamily clients have properties nationwide and an overall brand identity. “We always take that into account, too, when we’re designing—to see if it’s something they want us to incorporate,” she said. The leasing team also provides input so there are no disconnects between what Catalina Design Group is doing and what the property branding needs to be.

“We’ve done a lot of vintage properties, and they’re so fun,” McLoughlin added. The goal is to preserve the charm and the character of the project while updating it to modern needs and getting it functional. She also explained you can highlight unique features of the property and restore key items like the hardwood floors. “It’s fun to also blend old items with new so you can incorporate the history of the property and bring in local artists or display historical photos that tell the story,” McLoughlin said.

Measuring Success

Multifamily executives often focus on the technical aspects of capex projects without fully considering the factors that influence resident retention, renewal decisions and employee satisfaction, according to Landry. “Neglecting to engage an interior designer can lead to significant investments of time and money that may not resonate with tenants and employees,” Landry added. To enhance NOI, a critical factor in valuing a multifamily asset, it’s essential to focus on increasing income and reducing expenses.

With an eye on increasing occupancy, a well-executed rebranding project can elevate the community’s image, justifying higher rental rates. “We can also help decrease expenses with fewer unit turns,” Landry said. “Retaining satisfied residents is more cost-effective than turning over units. When a tenant moves out, repairs and updates are necessary for the next occupant, and these costs can vary based on the length of tenancy and the business plan for unit upgrades.”

A rebranding can also boost the onsite team’s morale by creating a beautiful, modern work environment. Reducing staff turnover saves on training costs and helps maintain occupancy rates and minimize delinquencies. “This often-overlooked benefit can be a powerful factor when considering a rebranding effort,” Landry said.

Ziereis notes that the word “brand” is used a lot, but sometimes it’s used incorrectly. There’s a difference between a logo and a brand. “I think adding a little bit of brand education can be helpful,” she said.

A brand establishes trust by presenting a cohesive image across all touchpoints. The consistent use of logos, colors and messages reinforces brand recall and recognition. A brand differentiates the property from competitors. It enhances the resident experience by creating a consistent quality of service throughout the customer journey. According to Ziereis, “A brand is the experience that’s going to attract the ideal renter to ultimately increase those rents.”

Read the August 2024 issue of MHN.