If you were one of the few developers fortunate enough to get financing for a new project in 2010, you'd probably think frills such as a pet saloon, music room, or community kitchen might seem a bit excessive in an economy with 10 percent unemployment (even if things are expected to be better in a couple of years when these projects actually open). You'd be wrong.
Some developers, including Atlanta-based Wood Partners, Atlanta-based Gables Residential, and Englewood, Colo.-based Archstone, are betting that these ambitious, high-end features will entice renters to lease in their buildings. And in many cases, these touches have little upfront cost and can provide a huge payoff down the road.
For instance, in its new 469-unit Class A Archstone NoMa in D.C.’s up-and-coming NoMa neighborhood, Archstone plans a pet salon and a music room. While both amenities may sound high-end, they actually have the potential to save the company money long-term and require little upfront cash layout. In fact, Rob Seldin, senior vice president of development for Archstone’s East Region, says pet saloons could actually save the company money.
Often, Seldin says, when residents come home from work, one way they bond with pets is to wash them in the sink. In fact, that’s often a larger problem than pets soiling the carpet or yapping late at night.
“Sinks have relatively small PVC lines and, after a couple of years of dog hair filling up the sink, the resident will call the plumber and he’ll have to plunge it,” Seldin says. “Those plunges lead to micro cracks in the down spouts that lead to leaks in the walls. The way we can prevent leaks is to keep people from washing their pets in their sinks.”
But instead of telling residents they can’t have pets, Archstone gives them a place to wash them. “We’ve had a couple of them here in D.C., and they’re very popular. They become another line item because you can sell pet products and pet grooming salon information,” Seldin says.
The music practice room also comes from a need to eliminate noise problems. Seldin says one of the main reasons people leave Archstone’s apartments is because of noise. Sometimes that comes from musicians as they practice. “There was a resident that played the tuba [in one property],” Seldin says. “And when he practiced the tuba, all of the units around him would complain. Obviously you don’t want to tell people they can’t be musical."
So the company soundproofs rooms that aren’t leaseable and turn it into a music room. “It’s now an attraction because we can market to musicians,” Seldin says. “We can say if you’re creative and want to have a creative lifestyle, live with Archstone.”
Meanwhile, Gables provides high-end in-unit features such as iPod docking stations, but it's also focusing on community amenities that it thinks can gives its residents the opportunity to socialize without going out to a bar or restaurant to spend money.
“People want to meet their neighbors and have an opportunity to socialize,” says Sue Ansel, executive vice president and chief operating officer for Gables. “We want to have more amenities where people can congregate. For example, demonstration kitchens in the common areas are a place where people can come and gather.”
That said, even as apartment owners ramp up certain features, they are pulling back in other areas, namely unit size. Ansel says Gables is looking at building smaller units. The model of high-end amenities plus small units has worked in this recession. Wood Partners opened its Glass House property at the depths of the recession in March 2009. On the surface, the LEED-certified property doesn’t seem to a recession value with floor-to-ceiling glass walls, an infinity-edge pool overlooking the city, rooftop sky deck, and state-of-the-art fitness center and media room.
Though Wood had to provide a three-month concession at one point (now it’s down to two weeks), Glass House is now 98 percent leased. Part of that is because unit sizes are smaller. “At the end of the day, the absolute check our customer is writing is competitive,” says Todd McCulloch, Wood Partners' Dallas director.