As Developers Unleash Thousands Of Apartments, Amenities Become Key Battleground
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The muskets of yesteryear — computer lounges, tennis courts, game rooms and cable TV packages — have evolved into the rocket launchers of coworking facilities, soccer fields, e-commerce storage and Peloton cycles. Welcome to the front lines of the multifamily amenity wars.
“There is sort of an amenity war going on now,” said Rob Meyer, a partner with Atlanta-based Catalyst Development Partners. "And we love it. It's all about product differentiation."
When it comes to apartments, amenities have always been part of the package for renters. They were the perks of renting a much smaller living space than a single-family home, the aspects of apartment life that made for gorgeous pictures in marketing brochures.
But ever since the end of the Great Recession, as the multifamily industry boomed throughout the Southeast, amenities have become a serious business and key to luring tenants willing to shell out record-high rents. More than 900,000 new apartment units have delivered across the country during the past three years, the highest rate of new development since the 1980s, according to a recent RentCafé report.
In Metro Atlanta alone, developers will try to fill 9,000 new units this year, and amenities will play a huge factor in luring new residents.
“For us, it's just so critical that you have the best amenities that differentiate us from our competitors,” Tribridge Residential partner Jim Schroder said. “It's an arms race for the best amenities.”
Meyer and Schroder are among the industry generals leading the charge in apartment amenities who will be featured panelists at this year's Bisnow Multifamily Annual Conference: Southeast.
The current rental renaissance is largely being driven by millennials who have forgone buying a home in the suburbs, so far, and instead have flocked back to the urban core of cities across the nation. Nearly 90,000 new residents moved into the Metro Atlanta region between 2016 and 2017, according to recent U.S. Census Bureau findings. Of that, the city of Atlanta saw more than 13,300 new urban dwellers into its borders.
With the paradigm shift in renter demographics, some amenities that were common at apartment complexes 30 years ago have largely become extinct.
Pre-negotiated bundled cable and internet packages are a thing of the past. Less than half of Tribridge's residents still subscribe to cable service providers, Schroder said. Instead, more and more residents are opting for internet only and streaming services like Netflix.
Tennis courts also have disappeared at many properties, especially at suburban apartment complexes. Some developers have even converted dusty clay courts to playgrounds and soccer fields as couples begin to raise families in apartments.
“Our big tenant here is families because of the quality of the schools,” Pollack Shores Vice President Brendan Whalen said. Some of that land will also be turned into a soccer field, a growing craze in Metro Atlanta, Whalen said. “With the rise of [Atlanta] United, soccer fever is kind of in the air in Atlanta."
Schroder said his firm also is converting tennis courts into soccer fields and playgrounds.
“The amount of use it gets, it's like 10 times what it was when it was a tennis court,” he said.
“Volleyball is ancient. Nobody does that anymore. Putting greens are out,” Columbus, Georgia-based Flournoy Development CEO Thomas Flournoy said.
Some panelists said even the communal computer lounge or business center is past its prime.
Meyer said his firm instead has been converting its old business and computer centers into coworking facilities that residents can use for free on a first-come, first-served basis. The desire for coworking has grown in recent years as more and more residents begin to work from home, even part time, yet still want some form of social interaction.
“We know that a significant number of people in our communities now … work from home,” Meyer said. "And that number is going to continue to grow."
Today, amenities in modern upscale apartments are largely being driven by the fascination with community and wellness. Developers are even emphasizing common amenities over individual unit amenities since residents tend to cloister more together than spend time alone. The shift is moving renovation and amenity upgrade dollars to common areas more than units.
“For $150K, you can get a huge bang for your buck that everybody can enjoy,” Meyer said.
That has many landlords pushing up the size of their gyms, sometimes into the single largest amenity on an apartment campus. These aren't the same gyms that used to wallow in apartment complexes. These are internet-connected facilities that have more than just free weights and a few mats.
For Catalyst Development, its gyms now have high-intensity interval training equipment, giant tractor tires, rotating rock walls and even Peloton bikes — stationary cycles that stream live or pre-recorded workouts, Meyer said.
“There's been a technological revolution, of course, in the last 10 years,” Meyer said. “I think [apartment gyms] will go more and more into fitness-on-demand and remote instruction just because it's too convenient, and you can get access to so much great advice."
“Part of it will be driven by technology,” Schroder said. "You can say that's getting ridiculous ... but at the same time, it's also a fraction of the cost of what we've done in the past of bringing in live instructors."
Rieger said his company is eyeing a digital concierge that would allow residents to request services, order food or reserve spots in the yoga studio.
“In order for us to have a competitive advantage when we enter into a market-rate development, we want to go above and beyond in terms of amenities,” he said.
Package storage is another critical feature, and one that is becoming even more important as consumer shopping habits shift toward online retail. Dog parks and dog spas are also among the latest features that have become expected amenities in apartments.
Pets becoming more commonplace is forcing Catalyst Development to forgo using carpet in its apartment units and instead use laminate flooring, which is easier to clean up and maintain if furry roommates have an accident.
“Let me tell you something,” Meyer said. "Millennials have dogs like no other generation."
Hear more amenity war stories at Bisnow Multifamily Annual Conference: Southeast Wednesday, Sept. 12, at the W Atlanta in Midtown.