The Age of Amenities: Adding Value to Apartment Communities
Apartment communities can benefit from upgrading basic amenities
The conference circuit always is a good amenity entertainment. Association gatherings like the recent NAA Education conference can pique the interest of attendees with the flashy new apartment trends, some of them just simply over the top. But not everyone commands tiled parking spaces or a deluge shower.
The National Apartment Association’s recent report “Adding Value in the Age of Amenities War” proves that most owners don’t always rely on flashy upgrades to earn a good return. Offering residents the opportunity to just catch a cool breeze under a ceiling fan or be able to wash clothes inside a unit are among the most popular upgrades and additions – and some of the best values – according to data compiled from 100,000 units in 35 states.
The NAA study examined 43 unique amenities to identify the most popular upgrades since 2014 and those that had the greatest impact on revenue at the community and unit levels. Data was compiled nationwide and in 11 selected cities, from January 2014 to September 2016. The study also cited the return on investment for updating apartment communities with popular amenities.
Washers, dryers prove to be low-cost upgrade with a good return
Energy efficient appliances and high-end kitchen appliances ranked first and third among owner upgrades inside apartments in the last few years, but neither proved to be a better investment than improvements with washers and dryers. While each netted a 15-16 percent of revenue enhancement per unit, washers and dryers gave the best return.
“With costs averaging almost 60 percent less than energy efficient appliances, washers and dryers clearly offer the greatest return on investment,” the survey said.
Average cost of upgrading washers and dryers was $835 per unit.
Lighting, plumbing and electrical upgrades, ceiling fans, cable TV and garbage disposals were among other popular upgrades that cost about $1,000 or less per unit.
Owners are upgrading with socialization in mind
Outside the unit, upgrading clubhouses and common areas designed for socializing proved to be the biggest bang for the buck compared to unit-specific upgrades by an average of $25 per unit in rent increase. Amenities suited for man’s best friend proved to have the greatest return on investment, with a greater opportunity for rent premium compared to low investment cost.
Fitness centers, swimming pools, outdoor kitchens and play areas are among other features that add good value.
Interestingly, a recent study by J Turner Research indicates that residents are willing to pay a premium for fitness and wellness-related amenities but owners surveyed did not spend as much on either. Fitness classes and walking trails rated in J Turner Research’s top three but were 16th and 13th, respectively, among owners.
Case studies show that basic amenity upgrades work
A pair of case studies featured in the report support that spending capital dollars to upgrade older properties can reap benefits. Upgrades to properties in Irving, Texas, and Lorton, Va., netted returns of 39 and 37 percent, respectively.
The Village at West Irving, built in 1974, focused on a combination of in-unit and common-area upgrades at a total cost of $239,000. Units got ceiling fans, vinyl floors, high-end kitchen appliances, lighting, plumbing or electrical improvements and community wide Wi-Fi. Also, the swimming pool was upgraded.
Managed by Elmstone Group Property Management, LLC, The Village at West Irving boosted occupancy from 84 percent to 96 percent and netted a $51 per-unit increase per month on rent.
The big splash at a much newer property, 18-year-old Sanger Place, was improvements to the clubhouse, fitness center, playground/play area and the addition of reserved parking. Also, 16 of the 182 units located outside of Washington, D.C., were fully renovated.
After the upgrades, occupancy rose 4 percent and unit rent jumped to $55 per month.