3 Ways to Drive Revenue from Apartment Amenities
If companies make one wrong assumption, millions of dollars of investment becomes a wasted effort. In multifamily, no investment is perhaps more misunderstood than the luxury apartment amenity.
Popular opinion tells property managers that the market value of an outdoor fitness center or luxury swimming pool will offset the cost of building. But months later, those same amenity-rich apartments are sitting on the market waiting for tenants to show up. Data scientist Rich Hughes says the math is simple. The more amenities, the higher the price tag. $1,400 a month plus utilities ultimately pays for a 1 bedroom, 1 bath apartment, no matter how many spruced-up indoor golf courses or outdoor grilling stations it has.
Properties so often miss the mark when it comes to determining an amenity’s market value, so how do managers hedge their bets and make sure their amenities pay off? Here are three ways to make sure you invest in the right amenities and avoid the wrong ones:
1. Emphasize quality over quantity
Your target residents are looking for a few things—not everything. In a metropolitan area, a dog park can be ideal. For young professionals, fully equipped fitness centers may be a huge draw. Property managers need to explore the best apartment amenities in class and implement only the ones that give them the biggest bang for their buck.
2. Ensure the price is right
Setting the appropriate value of an amenity won’t happen in a vacuum. Managers need access to lease transaction data if they want to determine the best possible rent rates and keep themselves from common mistakes.
Why lease transaction data? Property managers who understand amenity pricing through data improve operational investment decisions and lease performance. Managers who learn how to assess the true value of amenities can price their units right, every time.
3. Measure your success
Good investments take even greater research. Managers with their ears to the ground learn about amenity value by comparing the success of apartments with a certain amenity to those without them. By evaluating what competitors are doing, managers can price units accordingly and drive both revenue and occupancy.
Those curious to find out more about amenity investments, maximize occupancy and revenue and assess the true value of rehab amenities can join data scientists Rich Hughes and multifamily leader Evan Hoffman for their session, “Amenities: The Misunderstood Revenue Driver” at Apartmentalize 2018 in San Diego, Calif.