There’s an arm’s race of sorts underway: multifamily landlords – urban and suburban alike – are investing in robust amenity packages as a way to attract tenants away from their competitors. The “high end” amenities (i.e., fitness centers and club rooms) from projects built 20 or 25 years ago are no longer sufficient. Today, tenants expect more—and they are willing to pay a premium for it.
Sponsors who develop properties with these renters in mind are best positioned to capture these renters and maintain them for multiple lease cycles. Investments today will help owners stay ahead of the curve in the years to come.
The Types of High-Tech Amenities Tenants Want
Renters today are more tech savvy than ever before. Millennials and their younger Gen Z counterparts have grown up with technology and increasingly, rely on smart home technology to streamline their busy lives. This includes things like Nest thermostats, smart locks, and Ring doorbells that can be monitored and controlled remotely by phone. Today, these types of devices are almost standard in new multifamily construction.
Smart Home Technology
Smart home technology like Nest thermostats, digital door locks and Ring doorbells have become commonplace in Class A and Class B apartment rentals. At Smartland, these devices are now standard in almost all our units – even though our target market is Class C and Class D. And we do not stop there. Our rentals also feature multiple USB outlets, Bluetooth speakers, smart lightbulbs and more. These devices, which require connectivity to the “internet of things” is one of the reasons we invest so heavily in providing strong WiFi at all our properties—if we are going to offer these smart home amenities, we need to be sure our WiFi supports all of these devices.
We expect to see the smart home tech market continue to evolve. We are already seeing this. The devices that were new and innovative just a few years ago have already been replaced with higher-tech models that offer more features and functionality. The standard Amazon Alexa, for example, has been replaced with many later versions of Alexa devices, ranging from the Echo Dot to the Echo Show.
We are also monitoring some of the new technologies still being tested, such as in-unit devices that can adjust the window shades and thermostats accordingly depending on whether someone is in the unit. By tracking the cell signal on a tenant’s phone, the device can then open the shades or reset the thermostat when it senses that the tenant has arrived back at the property (or even, has returned within a quarter-mile of the property). Technologies like these can save on heat and electricity costs, savings that can be passed on to tenants and provide a sustainable feature that today’s tenants are sure to love.
It is important for any apartment investor to stay on top of these cutting-edge technologies to be sure you are offering the latest amenities to your tenants.
EV Charging Stations
Electric vehicles used to be few and far between, but today, nearly all major car manufacturers are adding some sort of EV option to their vehicle line. As EV vehicles become more affordable (and therefore, more popular), demand for EV charging stations will increase as well. With every major property renovation or new ground-up development, Smartland is by adding EV charging stations. To be sure, this is a costly investment that has not generated any ROI to date. Some will ask, “who has an EV car at your property?” and our response is, “it’s not about who has it now, it’s about who will have them in the future.” If we do not have EV charging stations, if we do not make this amenity available to renters, we will never have those EV car owners. At Smartland, we are planning today for the renters we want in the future.
Internet Wholesale Service
People are increasingly giving up their cable TV subscriptions, but in turn, they need high-speed Internet more than ever. At Smartland, we realized there was an opportunity to deliver this as an amenity to our tenants. Rather than each person negotiating their own Internet package with the local telecom providers, we put in our own Internet infrastructure. We purchase a wholesale line and then resell the Internet back to residents. We can monetize this service, while delivering Internet access to tenants at a lower rate than they would be able to negotiate on their own. We can include this in a tenant’s monthly rent, an additional revenue stream that in turn, increases NOI and property value.
Fido-Friendly Apartment Rentals
According to the National Apartment Association, pet-friendly amenities have the greatest impact on rent increases. They are also much more cost effective than other amenities, such as in-ground pools.
At Smartland, we are experiencing this first-hand. Many renters are delaying having children, and instead, they are adopting pets. We are embracing this trend by providing significant pet-friendly amenities at our properties. For example, at one of our projects, we are currently building a half-acre dog park. At another, we are building a 30,000 SF dog park. These spaces are relatively easy to design and maintain and create great bang for our buck. Between deposits and other pet fees, tenants will pay the equivalent of 13 months’ rent during a single 12-month period.
Now, there is a chicken-and-egg scenario to think about. In order to warrant building these pet-friendly amenities, you want to be sure you have enough saturation of dog owners living at your property. On the other hand, in order to lure more dog owners to your property, you need more pet-friendly amenities. At Smartland, we invest in the pet-friendly amenities on the front end and have found we quickly reach that saturation point to make the investments worthwhile.
Forward-Thinking Transportation Alternatives
For too long, multifamily investors have assumed that every household will own at least one personal vehicle. Depending on the market, that might be the case. But increasingly, some households are forgoing personal vehicle ownership altogether. Others are reducing the number of vehicles they own, so a two-adult household might only own a single car, for example. These renters need alternative transit options.
At Smartland, we offer two types of transportation alternatives for our renters. We provide robust bicycle infrastructure, including bike racks and safe storage solutions. We think about how tenants will bring their bicycles back to their units, and design elevators and hallways to accommodate with bicyclists in mind. We also offer on-site bike repair services for those who rely on their bicycle, either for work or pleasure.
We have also looking to partner with Uber to provide “Uber Me Home!” Anyone who lives in a Smartland apartment complex gets a free Uber ride once a month, from wherever they are, between the hours of 9pm and 4am. This ensures our renters can get home safely, regardless of whether they own a car or not.
Happier, Healthier and More Vibrant Communities
Heavily investing in amenities certainly requires a major capital commitment—but for us, it is worth the cost on many levels.
In many cases, the buildings we are renovating are not so much distressed as they are depressed. When we go into a community and pledge to make significant property improvements, including the integration of the amenities we have discussed here, residents welcome us with open arms. People want to be proud of where they live, and we deliver properties that anyone would be proud to call home.
Of course, with due time, there is some matriculation of tenants. Yet the tenants who move in after the property has been renovated tend to be higher quality and have higher credit. By attracting higher-quality, more affluent renters, we can help to stabilize and create more vibrant communities. These are the types of impacts we hope will live on for many years to come.
Multifamily amenities have come into the spotlight, particularly in response to the COVID-19 crisis. Many renters moved from their expensive urban apartments to properties located in the suburban ring, where apartment communities offered more living space as well as outdoor amenities such as tennis courts, in-ground pools and dog parks.
At Smartland, we are not investing in amenities in response to a global pandemic. Our strategy has always been to deliver high-quality apartments with robust amenities. It is part of our core investment thesis: urban renters moving to suburban areas have come to expect these amenities, and among those living in suburban areas, there are always those willing to pay a slight premium for the amenities we can offer. These are the renters we are positioned to capture and so far, have proven able to do so with great success.
We are not frugal with our amenities, but we are not careless, either. We carefully monitor the ROI of any investment to determine whether to make certain amenities standard across all our properties. In many cases, we find that amenities pay for themselves (many times over) in less than a year dropping all additional rental income to the bottom line boosting NOI and asset value. This thoughtful approach is one of the ways we increase NOI and boost returns for our investors.
Are you considering a multifamily investment? If so, contact us today. We would welcome the opportunity to tour you through any of our projects to show you how these amenities come together to bring our properties to life.