Competition to attract new residents and seal the deal on renewals was a major driver for the Top 25 Renovators last year.
Among the industry’s more-active companies, Greensboro, N.C.–based Bell Partners renovated 2,724 units, planting the firm at No. 7 on the list, up from ninth in last year’s rankings.
One of Bell’s most notable renovations concerned a 200-unit community in the SouthPark area of Charlotte, N.C. Although the property wasn’t that old, it struggled to compete with new product hitting the market, says E. Durant Bell, executive vice president of construction services for the company.
Bell Partners spent about 16 months completing the renovation, which included granite countertops, upgraded flooring, brushed-nickel lighting, and new appliances. And the result ended up being a huge success.
“The existing residents and new residents were really wanting and willing to pay for renovated units,” Bell says. “[The renovation period] went quickly, and we were able to hit our budget. They were leased quickly; then, the returns were really good.”
To speed up the renovation time line, the company pushed rent increases to try to force turnover. The firm was surprised to find, however, that many residents stayed, jazzed about the possibility of having a fresh look to their apartment.
“While we thought we were being aggressive with rents—sometimes increasing rents by $200 to $300 more—people would still stay,” Bell says.
Portfolio-wide, the company upgraded other properties, too, to bring them up to par with the current market. Some efforts were quite extensive, like the rehab of the 490-unit Bell Park Central in Dallas, in which the company invested about $2,600 per unit. Meanwhile, small finishes, costing under $1,000 per unit, were also part of Bell’s renovation strategy last year.
“You don’t have to spend $7,000 to $10,000 a unit to get a good bang for your buck,” Bell says.
Minor Changes, Major Impact
Los Angeles–based JRK Property Holdings did more than 4,400 renovations last year, helping the firm maintain its No. 3 spot on the list. Many of the company’s projects were fueled by new acquisition activity.
Like most renovators, JRK worked from the outside in. Signage, landscaping, and curb-appeal updates were often starting points for a renovation, says Bobby Lee, the company’s president, before remaking interior common areas with lighting and energetic, lively colors of paint.
“We are able to get a very high return on investment for those improvements by adding light and color and fun, and the ability to dream, into our common areas,” Lee says.
And while the team at JRK did an array of modest renovations across the company’s portfolio, it also worked on some large projects, overhauling common areas such as clubhouses and swimming pools.
For instance, the clubhouse at its Carrington Place property in Charlotte was in need of a large-scale upgrade. So, the company knocked down the existing structure to build a new one, complete with modern glass and steel.
“Even as we started it, we were immediately able to raise rents by $100, just by the expectation of what was to come,” Lee says.
Whereas JRK focused on acquisition–rehab deals last year, Greystar Real Estate Partners emphasized significantly upgrading existing units to feature the newest, best materials, says Wes Fuller, executive director of investments for the Charleston, S.C.–based firm.
“We’re in a constant search to find what the most in-style materials are and what’s the most durable,” he says. “If you go into a new-construction project, you’re seeing flooring, countertops, and fixtures that we use for renovations. We want the outcome for our properties to really look and feel like newly developed assets.”
Bell, JRK, and Greystar certainly weren’t alone in their enthusiasm. In a sign of just how much renovation activity took place last year, Greystar’s renovation work increased 21 percent over the year before, and yet, it only maintained its No. 10 spot on this year’s list.
At the top of the rankings, The Bascom Group claimed first place, after a one-year hiatus from the Top 25, knocking Rochester, N.Y.–based Home Properties down a peg in the process. The Irvine, Calif.–based firm came roaring back: In 2012’s list, Bascom placed 25th, with just 581 units. Other big gainers include two Michigan-based firms: Farmington Hills’ Village Green, which leaped five spots, to No. 8, and Ann Arbor’s McKinley, which climbed three places, to No. 5.