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Multifamily

How to Improve Your Rental Property

Tenant needs and preferences continue to shift as the pandemic response evolves. To remain competitive, it’s essential to improve your rental property. Detailed below are the top six shifts and the concurrent implications for any rental property manager interested in learning more on how to improve their rental property along with other valuable property management tips.

1. Consumer Shift: Hybrid Work is Here to Stay

With the Delta variant raging, employers have changed their tune about returning the office in full force by Labor Day. High-profile companies including Wells Fargo, Apple, Lyft, BlackRock, and Amazon have all delayed their return to office plans. In a recent Accenture study of 9,000 workers, 83% expressed a preference for hybrid work: a combination of work-from-home and work-in-office1. As a rental property owner, taking this shift into account will be essential to success when it comes to planning for amenities and rental property upgrades.

Rental Property Implication: A Rental Unit Must Work as a Remote Office

Speedy Internet today is a necessity and not a luxury. A tenant expects that broadband will be available from the day they move in. Most importantly for property management, however, is that they are willing to pay higher rent for high-speed internet access — about $35 more per month2.

A potential tenant is seeking an apartment that offers a variety of usable space to accommodate their new normal of balancing work and work and personal life at home. Making rental property upgrades by creating dedicated workspaces whether in the rental unit or as an amenity is often a competitive advantage. Businesses centers of old are being transformed into new co-working spaces that meet social distance guidelines. Charging centers and extra outlets that make sure residents stay powered up and connected can also appeal to a prospective tenant.

At Broadway Chapter, a 242-unit apartment community under construction in Fort Worth, Texas, developer CRG has prioritized such property upgrades and has redesigned some amenities for remote workers. Instead of game rooms or social lounges, the rental property now includes private study offices, small group rooms and hospitality suites for hosting small business gatherings. Further, CRG’s new development strategy includes amenities specifically designed for the work-from-home tenant, with pocket offices and what Managing Partner J.J. Smith refers to as “Zoom-worthy common spaces.”

2. Consumer Shift: Mask Mandates Are Keeping Residents Home

With the CDC reversing its indoor mask guidance in public spaces regardless of vaccination status as of July 27, many states followed suit. Further, the Transportation Security Administration extended its mask mandate, originally set to expire on May 11, until September 13, 2021. These actions have caused uncertainty with consumers and residents with some of them returning to lockdown habits of staying in, ordering take-out, socializing in a small pod, and refraining from international travel.

Rental Property Implication: Design More Flexible Spaces

According to a recent RENTCafé survey, a renter wants more space in their rental unit, making it a higher priority than the safety concerns of last year3. In fact, in 36% of US cities, apartments under construction are larger than those built during the last five years, and units in 33 of the 92 cities studied increased 50 square feet on average. The demand for more space and flexible space is real.

3. Consumer Shift: Outdoor Spaces are Safer Than Indoor Spaces

As the CDC and other scientific institutions have reiterated, outdoor spaces are safest as fresh air is constantly circulating and dispersing the dangerous respiratory droplets of others.

Rental Property Implication: Expand Outdoor Areas

Balconies and outdoor space are a hotly requested amenity for apartment communities. Whereas CGI Strategies, a California-based real estate investment and development company, previously stated that approximately 70% of their apartments included balconies, they are now aiming for at least 90% in new projects4.

One savvy marketing strategy is being employed by Markwood, a California-based real estate investment company. It is marketing an “outdoor living room” — a covered terrace or space with balcony walls on three sides that protects residents from sun and rain, but still allows children to play and residents to work or entertain outside.

Research shows that investing in a roof-top deck not only has a positive return on investment but can also attract and retain a potential renter too5. Lush landscaping boosts the aesthetic appeal and acts as a natural insulation lowering heat and air conditioning costs. For example, some property managers in New York are creating flexibility in their outdoor spaces by repurposing cabanas as outdoor schools and installing movable furniture6.

4. Consumer Shift: Residents Got Closer to Their Furry Friends

Residents were obviously looking for companionship during the pandemic as 13 million households got an animal companion between March and December of 20207.

Rental Property Implication: Create Pet-Friendly Environments

Research is rolling in that pet-friendly rental properties act as a competitive advantage. According to 2020 CoStar data, pet-friendliness is one of the top three amenity searches8. Whether you’re a property manager or property owner, how can you make your property better suited to four-legged friends?

  • Dedicate Recreational Space – Creating a dog park (also known as a “bark park”) at your rental property provides safety for residents and a respite for pets. It’s also possible to create segments of outdoor space dedicated to pets such as a rooftop deck.
  • Add Pet Grooming Services – Fluffy not only wants to look good, but also smell and feel good too. Higher-end rental properties are partnering with grooming services and even dog walkers to raise the satisfaction of pets and their owners.
  • Create Pet-centric Activities – Allow your marketers in property management to get creative here. Options include pet adoption days, look like your pet contests, best pet photo via social media, etc.

5. Consumer Shift: Consumers & Regulators Embrace Electric Vehicles

In September of 2020, California Governor Gavin Newsom hammered a bold executive order requiring that all vehicles sold in the Golden State release zero emissions by 2035. This order stems from the fact that 90% of the energy consumed in the transportation industry comes from petroleum and that emissions account for the bulk of US greenhouse gases. Other states haven’t regulated so heavily, but as of July 2021, 47 states and the District of Columbia provide an incentive for electric vehicles or alternative fuel vehicles9.

On the consumer side, new registrations of all-electric vehicles jumped 267% to 1.1 million, according to the International Energy Agency10.

Rental Property Implication: Investing in Charging Stations

At the crossroads of consumer behavior and governmental regulation lies the opportunity to meet tenant demand for charging stations on-site. As Amanda Clevinger, policy and programs manager for Bright Power explains: “Property owners are already thinking about how they can electrify their properties, and they should keep EV charging in mind as they build their capital plans.”

6. Consumer Shift: Online Shopping Continues to Expand

Consumers shifted to online shopping during the early days of the lockdown, but new research suggests that they are not going back to their old shopping habits. McKinsey & Company reports a 15-30% growth in eCommerce shopping across a range of industries11.

With the exponential rise in online shopping, there is a concurrent spike in residential delivery and need for secure package delivery boxes. Insider Intelligence forecasts US retail eCommerce sales will grow 13.7%, reaching $908.73 billion in 202112. ECommerce’s share of all retail sales hit a jaw-dropping 23% during the third quarter of 202013. This statistic translates into an estimated 486 packages being delivered per week to every multifamily property!

Demand is rising too for refrigerated lockers thanks to same day delivery. Researchers in November 2020 estimated that 38.7 million shoppers placed at least one online grocery order for delivery or pickup order during the preceding 30 days, up 3.6% from 37.5 million in August1414.

Rental Property Implication: Install Smart & Refrigerated Lockers

Residents expect their packages to be stowed safely and securely. Standing in a line during management staff hours to retrieve a package no longer meets tenant expectations. Smart lockers, however, allow residents to retrieve their packages on their schedule with zero human interaction…and within 10 seconds.

Smart locker technology allows residents to automatically get notified when they receive a package. They are then given a unique access code that they manually enter or a barcode they can scan for contact-free access to their delivery. Best of all, management staff is out of the equation, lowering labor hours by as much as 24 hours weekly.

Tenant needs are dovetailing with larger consumer and pandemic trends. Improving your property now not only provides a competitive advantage and increases property value, but also a solid foundation for attracting and retaining a prospective renter.

Sources:

  1. Cutter, Chip. The Wall Street Journal. If You Thought Working From Home Was Messy, Here Comes Hybrid Work. (2021, May 25). https://www.wsj.com/articles/if-you-thought-working-from-home-was-messy-here-comes-hybrid-work-11621935000.
  2. Friedman, Robyn. Multi-Housing News. How to Attract Remote Workers to Your Apartment Community. (2021, January 28). https://www.multihousingnews.com/post/how-to-attract-remote-workers-to-your-apartment-community/.
  3. Ciuntu, Alexandra. RENTCafé. One Year Later: Pandemic Shifts Renters’ Priorities as ‘More Space’ Beats ‘Cheaper’, Survey Shows. (2021, March 9). https://www.rentcafe.com/blog/rental-market/real-estate-news/one-year-later-pandemic-shifts-renters-priorities-as-more-space-beats-cheaper-survey-shows/.
  4. Kalinoski, Gail. Multi-Housing News. How Will the Pandemic Impact Future Apartments?. (2020, August 5). https://www.multihousingnews.com/post/how-will-the-pandemic-impact-future-apartments/.
  5. Lambert Investments Inc. The Growing Popularity of Rooftop Amenities. (n.d.) http://lambertinc.com/growing-popularity-rooftop-amenities/.
  6. Hughes, C.J. The New York Times. How the Pandemic Has Changed Apartment Building Amenities. (2020, September 11). https://www.nytimes.com/2020/09/11/realestate/pandemic-apartment-amenities.html.
  7. Sindreu, Jon. The Wall Street Journal. After a Pandemic Pet Boom, Investors Should Fear Abandonment. (2021, August 23). https://www.wsj.com/articles/after-a-pandemic-pet-boom-investors-should-fear-abandonment-11629714780.
  8. Pinnegar, Robert. The Washington Post. How apartment communities are becoming more pet-friendly. (2021, February 15). https://www.washingtonpost.com/business/2021/02/15/how-apartment-communities-are-becoming-more-pet-friendly/.
  9. Hartman, Kristy & Laura Shields. National Conference of State Legislatures. State Policies Promoting Hybrid and Electric Vehicles. (2021, August 20). https://www.ncsl.org/research/energy/state-electric-vehicle-incentives-state-chart.aspx.
  10. Steele, Jeffrey. Multi-Housing News. Are Your Apartment Properties Ready for the EV Transition?. (2021, August 12). https://www.multihousingnews.com/post/are-your-apartment-properties-ready-for-the-ev-transition/.
  11. Torkington, Simon. World Economic Forum. The pandemic has changed consumer behaviour forever – and online shopping looks set to stay. (2021, July 7). https://www.weforum.org/agenda/2021/07/global-consumer-behaviour-trends-online-shopping/.
  12. Phaneuf, Alicia. Insider Intelligence. Ecommerce Statistics: Industry Benchmarks & Growth. (2021, July 29). https://www.insiderintelligence.com/insights/ecommerce-industry-statistics/.
  13. Kapner, Suzanne. The Wall Street Journal. Covid-19 Rewrote the Rules of Shopping. What’s Next?. (2021, March 12). https://www.wsj.com/articles/covid-19-rewrote-the-rules-of-shopping-what-is-next-11615561232.
  14. Digital Commerce 360. Coronavirus adds $105 billion to US ecommerce in 2020. (2021, June 16). https://www.digitalcommerce360.com/article/coronavirus-impact-online-retail/.

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