Hardware And Software: Multifamily Amenity Strategy Of The Future
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The amenities that set apart stellar multifamily properties from the run-of-the-mill may not be the latest fad “hard amenities” like fitness centers. Multifamily experts say soft amenities (like concierge service) that streamline their residents’ lives and flexible spaces are what will set properties apart from one another.
Genesis Real Estate Group President and CEO Gordon Ip said physical amenities are losing their ability to garner good returns on units to a customer preference for “soft goods,” speaking at Bisnow’s Dallas Multifamily Explosion event.
“When I say soft goods, I mean services, like concierge service … the component that developers have to work on, and we are working on, is the soft, programmatic side of things."
In The Katy, where 40% to 50% of the residents have animals, Ip has placed a vetted dog-walking service inside the building so busy residents can roll out for work in the morning without worrying about animal accidents in their homes. The strategy is simple: If there is an identifiable, consistent resident need, fill it rather than spending money on costly amenities that cannot be easily changed when the fad dies.
“Think about the math that someone is doing when they are choosing to move into an apartment because they are thinking about their wireless internet; they are thinking about their coffee; they are thinking about their dry cleaning, packing services and all the other add-on expenses in their lives,” Gables Residential Area Vice President of Investments Katy Slade said. “The more that a community can offer in terms of amenities that help reduce somebody’s potential to have those add-on expenses, there is an equation there that helps them [decide where to move].”
As sites in primary markets gets more rare and more expensive, multifamily developers are building their new properties with one eye on the present and one eye on the future. Baking flexibility into amenities and common spaces is one way developers address present whims and plan for the ones to come.
Trammell Crow Residential Managing Director Matt Enzler is putting “Uber lounges” in his properties and looking at ways to turn common areas into co-working spaces. Ubering everywhere and co-working are both buzzy, in-the-now fads, but what really attracts Enzler and other developers to this kind of amenity is their ability to be easily scrapped and retooled for future resident needs.
“We are building stuff today because it is a fad, people really want to use that certain amenity or like that thing, but five years from now it might be gone. So the actual real estate, the hard space has to be flexible,” Enzler said.
What makes all this bending over backward worth it? Ip said it is hard to quantify an exact return. But retention goes up on properties with the right mix of hard and soft amenities.
“I do know by observing the different marketplaces, that the properties where you have better hardware and better software, the turnover rate is significantly lower. The range is huge. People turn over from 60% on properties that do not have these two components to below 40%, and that is a big number in terms of turnover costs and lost rents,” Ip said.