Jim Tatum
The multifamily market continues to hold its own, and even thrive in the current volatile economy, and one increasingly important factor in that success seems to be community amenities.
With single-family home prices and interest rates still at historic highs, it’s not surprising that more than 44 million American households are rental households, according to the U.S. Census Bureau. In fact, a strong argument can be made to rent these days, even if you are able to buy a home, say companies such as Global Real Estate Partners. While there are differences in the motivations and expectations of renters, the fact remains that it’s currently less expensive to rent than to buy.
According to the National Home Builders Association (NAHB), the affordability gap doubled in 2022, making renting more affordable than owning for the first time in many years. Consequently, even those who can afford to buy a home are increasingly opting to rent anyway, often investing the money not spent on a mortgage for other, more lucrative investments. In fact, not only was the median income of renters around $71K in 2021, but the number of people in the U.S. making up to $150K or more a year rose by 87%, to around 3 million, between 2015 and 2021, according to the census.
Companies such as Diversified Properties point out that not only is it currently less expensive to rent, but those who rent get quite a lot for their money. As the demand for multifamily continues to surge, amenities are becoming increasingly important factors in planning, developing and reimagining multifamily spaces. According to the National Apartment Association, developers are putting greater focus on amenities.
What are renters looking for when it comes to amenities?
Organizations such as NAHB and the National Multifamily Housing Council (NMHC) have noted that many renters often seek security-related amenities first. These can include smart locks, thermostats, safe package receiving and storage services, and property access control. Pet amenities, parking and transportation amenities, and co-working spaces also seem to be high on the list of renter priorities. CBRE reported that amenities such as workspaces and common spaces are being reimagined and reconfigured to appeal to a given community’s residents. For example, common areas such as gyms and lobbies are starting to be revamped into workspaces, meeting rooms, DIY craft areas, art spaces and music studios. Vive Funds notes five major trends they are following this year for multifamily housing, including technology integration, sustainable and energy-efficient design, health and wellness amenities, flexibility and convenient leasing options, and the integration of shared spaces.
What does this mean?
For starters, somewhat empty lounge spaces are being revamped into areas reminiscent of a neighborhood coffee shop. Indeed, developers such as Denholtz Properties have done that and more, adding wine and beer beverage self-serve/purchase kiosks to community areas, even allocating a certain number of beverages to residents for free. This has become a popular amenity, as it fits into social events such as outdoor movies.
Developers such as Larken Associates and others are taking the initiative in designing new communities with enhanced amenities in mind, from the individual units themselves to community spaces and services. The notion of “work where you live, live where you work” has influenced design trends for individual apartments, with one of the most common examples being work areas incorporated into all floor plans, whether they are office spaces, small nooks for desks and electronic accessibility or entire rooms designed to be home office spaces. But just as important, people want to get out of their individual spaces too, so community areas such as clubhouses are being designed (or reconfigured) so that residents have spaces to work for the day away from their living areas, including quiet rooms and small conference rooms. Developers such as Larken, Denholtz, Diversified and others also understand that all work and no play make Jack and Jill dull folks, so they are taking a holistic and lifestyle-oriented approach to amenities.
Amenities are not necessarily defined spaces and objects, but rather, they reflect the resident lifestyle in general. For example, fitness is a major consideration for many, so space such as the old community workout room is being updated. Gone are the old rusty weight machines, treadmill and stationary bike; fitness spaces are not only being revamped with state-of-the-art exercise equipment — effectively eliminating the need for an outside gym membership — but flex spaces, indoor and outdoor, are being incorporated into fitness areas for a variety of fitness-oriented uses such as yoga classes.
Another important factor is pet-oriented amenities. Since the pandemic, the number of households who have dogs, especially, has increased exponentially. Consequently, many communities are adding more pet-oriented amenities. For example, Denholtz often partners with companies such as Wag, who will send a groomer to the resident’s apartment. Other communities may provide infrastructure such as dog parks and bathing stations; still others may have onsite pet services as part of their concierge programs.
Still another important amenity people are asking for are package delivery and control services. Gone are the days of heavy package deliveries solely during the holiday season. Now, with everything from groceries to wine club to pet supplies being purchased online, much heavier volumes of packages are coming in all day every day. Communities are addressing this in a variety of ways. Some contract with companies such as Amazon to set up a delivery storage facility onsite and provide an app so residents can know exactly what they have received and where it is. Others provide concierge package delivery services to the residents themselves.
Another important service that some developers are just starting to address is maintenance timeliness. In the past, residents might report an issue, but since they were not home as much during the day, it might take an apartment maintenance worker some time to address it. Now, since people are home much more than in the past, they notice things and expect them to be resolved immediately. That means maintenance call volume has increased significantly. Those in the know say services and amenities are similar across property classes and markets, but degrees of services differ. But ultimately, people are willing to pay for amenities. What they are willing to pay is driven by their own expectations and their finances.
