Amenity Envy: How Much is Too Much?
A golf simulator room? Really?
Believe it or not, Multifamily Insiders reports earlier this year that it is one of the hot differentiators popping up as multifamily properties compete to appeal to young professional renters in an increasingly competitive environment.
So long to using granite countertops and hardwood flooring as compelling reasons to lease an apartment. Today, particularly at higher-end properties, unique common-area amenities are being used to help differentiate apartment communities from the competition.
The trick is knowing what your resident/prospect audience cares about and giving it to them. But what about the cost involved? The advantage of such amenities is that a single investment in something that your residents will love, like a golf simulator or putting green, can prove worth the money. For example, a community with 100 units spend $20,000 to expand a popular outdoor area. The advantage of having one accrues to all 100 units, bringing the cost per unit to $200. Divide this over the 10-year life of the addition, and you’ve just spent $20 per year, per unit, over 10 years. Does the addition of this amenity to your property add at least $20 to the perceived value of an apartment over the course of a year? It very well might.
The math looks a bit different when it comes to apartment amenities that appeal to a smaller percentage of residents. The golf simulator room might be of great value to a few, and some value to others, but will hold no interest to many. Can you justify the cost? Now it gets complicated: to those who enjoy golf, the simulator room might be worth an extra $20 or even $30 a month. To others, it’s merely something they feel they’re paying for and don’t value.
That said, Multifamily Insiders lists the following top apartment amenities that will “stand the test of time and make a particular multifamily housing complex more attractive than the competition,” based on the 450 West Coast projects author Stacey McLoughlin of Cataline Design Group has been involved with:
- Outdoor living spaces
- 24-hour fitness center
- Outdoor theater
- Rooftop deck
- Golf simulator room
- Office spaces
- Conference rooms
- Sports bar
- Cyber café
- Pet spa
Of note, geography and climate also can impact what renters want in an amenity.
Earlier this year, Multifamily Executive profiled The Current, a 17-story tower property in Long Beach, CA., boasting some extra amenities.
“The amenity spaces boast an indoor–outdoor rooftop dining area; pool and sun deck with USB charging ports and Wi-Fi; a fully equipped gourmet kitchen with an audio and screen system residents can control; a fitness center with individually tailored connectivity and Bluetooth options on each machine; a yoga studio with screen space for on-demand video instruction; automated package and dry-cleaning lockers; an in-lobby, e-resident interface synced to residents’ mobile devices; keyless electronic access control throughout the property; and, of course, a fully automated dog-washing station.”
Trying to quantify which apartment amenities will pay for themselves in desirability (that is, measured by higher occupancy and rent over the lifetimes of the assets) would frighten even the average M.I.T. math major. The decisions might be a bit easier for a property such as The Current seeking an over-the-top package of amenities. But what about properties with a more conservative budget and perhaps less affluent resident base?
Making the number crunching even harder is that fact that amenities require widely varying levels of ongoing costs. Hot tubs, pools and saunas require a lot of maintenance; a game room, not so much. There are also factors like insurance to consider. Add a dog park or spa and you might need extra protection. And, is it in your interest to have a lot of pet owners as residents?
Not all amenities come with a cost that must be absorbed by the property. For example, fees can be charged for package locker systems, battery charging stations and pet washing stations (yes, they’re becoming popular at apartments). So decisions must be made as to whether it’s preferable to offer these services “free,” with residents incurring costs in the form of higher rents, or require those who use them pay a separate fee… or perhaps generate ancillary income for the property.
As residents and prospects continue to look for the next best thing to enhance their living experience, one thing’s for sure: property management companies will continue to face difficult decisions about which amenities will keep them ahead of the competition while satisfying what renters and prospects want most.
What apartment amenities have you recently upgrading at your community? Or what’s on your amenity upgrade wish list? Tell us in the comments.