The Story
Multifamily amenities are undergoing a fundamental shift thanks to two primary drivers: technology and the lingering effects of the pandemic. Prior to the latter, the was an amenities arms race vying to attract renters. Many of these amenities were shut down in some fashion over the last two years due to the pandemic, which has owners and operators rethinking their amenity offerings. So what does the new multifamily amenity landscape look like? Let’s take a closer look.
Tech+ — Technology was always a trend in multifamily amenities, but the pandemic put that on rocket fuel. Millennials are now the biggest renter category now and they prefer the use of technology and its convenience. Smart is the new luxury, and tenants are increasingly demanding the seamless resident experience that various technology solutions offer, including but not limited to: digital door locks and thermostats, apartment community app, wifi as a service, delivery package control, dedicated ridesharing space, instant rent payments, automated maintenance, and smart access controls.
According to a recent survey, smart access such as mobile door access and video intercom were the top amenities desired by renters.
Smart Access — According to a recent NMHC survey, 71% of tenants are interested in controlled property and amenity access with 20% citing it as a necessity when considering whether to rent. The survey found that the average additional monthly payment that tenants would be willing to make for controlled access to the property is $36.
Further, tenants who receive 6-10 packages per month jumped from 15% in 2020 to 25% in 2021. This survey found that 73% of renters were interested in secure self-service 24/7 package access. Also, tenants would be willing to pay an additional $37.16 per month for this amenity.
Private Dog Parks — Our pets are our family, and according to Propmodo, private dog parks have hit an amenity sweet spot by not only adding green and outdoor space to a multifamily development, but a fun play area for residents’ four-legged family members.
WFH + Entrepreneurship — There were a record number of people quitting and starting their own businesses by the end of 2021, with some calling it the ‘Great Resignation’. Further, work-from-home (WFH) in some fashion is also here to stay. The new amenity landscape will incorporate perks that cater to this new group of workers and entrepreneurs. These amenities include on-site coworking spaces, meeting rooms, outdoor offices, and maker spaces.
The Outdoors Are In — Renters are willing to pay a premium for more outdoor spaces such as community gardens, parks, fire pits, terraces, lounge areas, walking paths, outdoor kitchens, and more. In a survey last year, fire pits took the top spot for outdoor amenities.
Private Areas — Dining, conference rooms, theaters, and other private spaces for residents to book and enjoy with friends and family are becoming more prominent in the multifamily space. Bonus points for seamless and dedicated catering from meal delivery services to these spaces.
EV — Electric vehicles are coming in hot to the multifamily space. With many jurisdictions and car-makers committing to increasing or solely using and producing, electric vehicles, this added amenity to buildings will be a growing trend over the coming decade.
Expert Take
“The national multifamily vacancy rate is expected to remain flat in 2022, primarily due to the amount of new supply expected to deliver over the next 12-18 months, coupled with the expected increase in rental demand stemming from improving employment trends. Although much of this new supply is expected to consist of more expensive, class A units in many places, we believe that higher single-family home prices may cause some tenants to opt for newer rental units that offer more amenities.”— Fannie Mae
“Rather than focusing on the way building amenities compete we should consider how they can be accretive. The property industry needs to understand that the benefits of how their buildings serve their residents and their neighbors can help raise the status of every property in the neighborhood, not just theirs. In a weird way, at a time when we are the most isolated, we are starting to see how interconnected we really are.” — Franco Faraudo, Propmodo
So What?
Amenities change the tenant relationship. Historically the relationship between owner and tenant was purely based on finances. No longer, as we see the improvement in amenities, we are adding emotion and community to the landlord-tenant relationship. That’s a good thing!
Amenities are no longer just about spaces, but how people interact with your asset. Technology will play an increasingly important role in this relationship, optimizing NOIs and the tenant experience concurrently. How’s your amenity game?
This Week’s Top Headlines
- January, normally a weak month for multifamily rents, saw a $8 rent increase to an all-time high average of $1,604 — Globe St
- A positive jobs report sent bond yields higher, hinting that mortgage rates should follow — Housing Wire
- 1 in 4 consumers from Fannie Mae’s latest monthly National Housing Survey thought it was a good time to buy (a record low) — Inman
- Further, the same survey shows that over 80% of 18 to 34 year-olds it’s a bad time to buy a house — Business Insider
- Around half of US homes that have financing are now worth double their loan amount — Realtor Magazine
- Metro areas in the Sunbelt and Mountain states are seeing the most apartment construction in the country — Globe St
- Pivot: Some examples of malls adding apartments to offset reduction in shoppers — OC Register
Weekly Chart
In their latest sentiment report noted above, Fannie Mae highlights the disenchantment with buying a home, which will likely push more renters into the market over the coming year.
