Guest Feature

 

Amenity Overload – What Apartment Renters Really Care About

By Briana Wright, Associate

Briana WrightResort-style pools, virtual group fitness, rock walls, bowling alleys, entertainment kitchens, fully equipped business centers and pet washing stations – these days, the sky is quite literally the limit for apartment amenities. Once off-limits to tenants, rooftops are now lavish gathering areas replete with grills, gardens, pools and outdoor movie theaters, and have become a near standard amenity in many cities. And the ubiquitous doggie park has also been a hit in the U.S., where people are spending more money on their pets than ever, collectively laying out in excess of $58 billion on Fido’s food and frills in 2014 (American Pet Products Association).

As the housing market continues to improve and the “lifestyle apartment” gains popularity, developers are piling on the amenities to entice renters and gain an edge in an increasingly competitive market. Being multifamily rehabbers and developers ourselves, extravagant (and, in our opinion, borderline outrageous) amenities like rooftop bocce ball and golf simulators beg the questions: which amenities do renters really care about, which are they willing to pay more for and which have staying power? For insight, we looked to renters themselves to understand their behaviors and attitudes toward atmosphere, health, eco-consciousness and social life. After visiting several of the new lifestyle apartment communities right here in sunny San Diego and referencing some recent surveys from Apartments.com, Multifamily Executive and others, we have uncovered a few truths about what today’s renters are looking for, and, ultimately, which amenities we believe are most worthy of investment. Following Yoda’s admonition to “always pass on what you have learned,” we wanted to share our findings:

Yoga and Group Fitness Room at the Broadstone Corsair

Yoga and Group Fitness Room at the Broadstone Corsair

Everyone wants to “fit” in.
The amenity that has arguably undergone the most significant transformation in recent years, the fitness center is no longer just a place to exercise, but also is a gathering space where tenants can socialize and take classes together. Interactive virtual group fitness is available at the touch of a fingertip and residents enjoy open, thoughtful spaces. Our friends at Alliance Residential’s newest lifestyle community Broadstone Corsair in San Diego told us, “The very first thing people do when they sign a lease here is cancel their gym membership”. And after taking a peek ourselves at the sunlit, two-story fitness club with state-of-the-art cardio and weight training equipment and a private yoga/dance studio with virtual group fitness…well, we weren’t surprised. But this trend isn’t limited to San Diego. A recent survey conducted by the National Multi Housing Council (NMHC) revealed that 84% of renters place great importance on their apartment building having a fitness center. The aforementioned Multifamily Executive (MFE) survey also showed that residents unanimously expressed the need for a large gym open 24 hours with a variety of modern fitness equipment and fitness classes.

Residents like “green” upgrades, but aren’t willing to spend the green stuff for them.

More and more people are embracing eco-consciousness as a lifestyle. In the MFE survey, when residents were asked about their preference for green features, “energy efficient appliances” was the top choice, with “walkability” and “recycling” following as second and third choices. Additionally, a survey conducted by Strata Research this year showed that 77% of renters felt “green” apartments were important. However, eco-friendly homes come with a price; are residents willing to part with the green stuff to be “green” and make costly upgrades a worthwhile investment for apartment owners like us? Well, historically, that answer has been “no”, and Strata and MFE’s recent findings show that things haven’t changed much. Strata found that only 60% of respondents said they would maybe pay more for green features; MFE’s findings also revealed that the majority of renters are not keen to pay more for an eco-friendly apartment.

Pet-friendly apartments will fetch tenants.

PetsAn August 2014 Apartments.com survey revealed that pet ownership among apartment renters has jumped from just 43% in 2012 to 72% in 2014. However, despite this upward trend, nearly two-thirds of pet owners in 2014 reported having difficulty finding an apartment that allows pets, and 70% of owners said their choice of where to rent was influenced by nearby pet amenities such as parks, veterinary facilities and pet stores. Dog parks have been a hit in the last few years, although, this shouldn’t surprise us considering “Doga” (yep – doggie yoga) is an actual thing as are iPhone apps that enable users to locate the nearest dog parks and set up play dates for Fido and Bella to bark and bond! All jokes aside, pet-friendly amenities are springing up across the nation, and research has shown that pet owners are willing to pay a premium to have furry friends, especially if there is a dog washing station and dog park downstairs.

Integration of digital and physical space is key.

Broadstone Little Italy’s Resident Clubhouse

Broadstone Little Italy’s Resident Clubhouse

Millennials make up the majority of U.S. renters and thus remain the most influential demographic on apartment trends. In an attempt to allure this generation of Internet-age renters, big developers like Alliance Residential and Avalon Bay are constructing high-tech buildings with digitally-integrated common areas. Millennials – who spend much of their day within the digital realm (translation: they are constantly on their iPhones) – have the same expectations for physical spaces as they do digital spaces. The ability to connect and socialize in areas where they can personalize their experiences is highly attractive to this app-addicted generation. At Alliance’s Broadstone Little Italy, the “resident clubhouse” includes three flat-screen TVs, Wi-Fi, MP3 docking stations, USB electrical outlets and fully-integrated business centers with Windows® and Apple® connections. Convenience is everything, and while smart-home technologies like smart thermostats and lightbulbs are attractive to tech-savvy renters, most of those options are cost-prohibitive. Affordable upgrades like outlet covers with USB ports can definitely tip the scales in an apartment owner’s favor as renters assess similar properties (Multifamily Executive).

The basics are still the basics.

While preferences of amenities vary across U.S. cities, most renters are still keen on basic comforts in their homes. The surveys we analyzed indicate that even in a market bursting at the seams with amenities, the majority of apartment renters place the greatest importance on the essentials: high-speed Internet, a washer and dryer and a functional, spacious floorplan. The Apartments.com survey plainly states, “Primarily, renters seek properties that offer everyday interior comforts like air conditioning, Internet access and laundry.”

Our Conclusions:

  1. Health and fitness are of great concern to today’s renters and fitness center upgrades are a worthwhile investment.
  2. While today’s renter pool appreciates “green features”, they aren’t willing to pay a premium for them; for now, eco-friendly and smart-home options will typically be cost-prohibitive.
  3. Pet ownership is growing and renters are willing to pay pet fees. The doggie bark park is here to stay and is a worthwhile investment in many markets.
  4. High-tech is high-priority. USB outlets, Wi-Fi and digitally-integrated spaces are highly desirable.
  5. Focus on the basics. The majority of renters today still care greatly about overall square footage, Internet access, functionality of floorplans and the convenience of doing their laundry in their unit or on site.

While flashy, resort-inspired common area amenities like life-sized chess and pool cabanas are gaining popularity in many markets, the majority of renters’ primary concerns are the basic comforts and conveniences within their private spaces. We believe that functional floorplans, upgraded appliances and polished interior finishes will continue to attract a steady stream of eager tenants in most markets. However, as apartment demand grows and floorplans shrink, creating attractive community spaces will become increasingly important. The “lifestyle apartment” is here to stay, yet understanding the behaviors, attitudes and social patterns of each city’s renter demographic is key to knowing the right amenities to invest in.

Last year, we tested the “doggie bark park” with great success at Talavera, our 144-unit condominium project in Tempe and are now convinced of the staying power of pet-friendly amenities. The jury’s still out on the longevity of “Doga”.

Briana Wright is an Associate in Pathfinder’s Asset Management department. She can be reached at
bwright@pathfinderfunds.com.