In times like these, some apartment developers tout their sparkling-new amenities to stabilize new buildings. Others rely on high-tech fitness rooms and amenity packages to put heads in beds. Still others trumpet their urban lifestyle and proximity to nightlife. Atlanta-based Gables Residential uses all of those factors to lure new residents, but it has another selling point. It has Johnny O.
If you aren’t in the Atlanta metro area, you probably don’t know Johnny O.—a disc jockey at local station Q100. He isn’t spewing syndicated partisan sewage all across the country, and he doesn’t have a Bababooey. What he does have is a Gables apartment (in fact, he’s had a few) and the ear of millions of Atlantans. And that’s enough for Gables.
The deal Gables hatched with Johnny O. shows just how aggressive (and possibly desperate) apartment companies have gotten to bring residents into their new developments. And Gables isn’t alone. In preliminary results for Multifamily Executive’s annual Top 50 survey, many of the country’s largest builders, including Gables, listed stabilizing new properties as one of their biggest accomplishments in 2009.
“It’s [new lease-ups] more of struggle because we can’t be the lowest-priced [apartment] in the market,” says Cris Sullivan, senior vice president for property operations at Gables.
Epoch Properties, which shares some markets in the Southeast and Texas with Gables, says it has gotten 25 to 30 people a month at its new developments, but not without some cost. “We were giving away a substantial amount of free rent,” says Kyle Riva, president of Epoch Properties.
Even in the affordable sector, Miami-based Carlisle Development Group sees similar issues. “The difficult economic environment directly impacts our residents,” says Mitchell Rosenstein, vice president of finance for the company. “As a result, we’ve seen more turnover, the need to offer appropriate concessions in tougher markets, and the need to implement more thoughtful marketing efforts.”
So far, 2010 hasn’t gotten any easier. “It takes just as much effort now [as in 2009] to secure every lease,” Sullivan says.
The Gables Strategy
The difficult lease-up market is a major reason why Gables continues to work with Johnny O.—a gambit that Sullivan thought she’d never have to attempt just a few years ago. To generate attention for its four lease-ups in Atlanta, it struck a deal with Q100. Johnny O and the station get money and discounted rents, while Gables gets lots on-air mentions from “talking points” that it provides and valuable real estate on Johnny’s blog. In one ad, the DJ introduces himself as “Johnny O. for Gables Midtown.”
“He just talks about living at a Gables community, but you can tell they are commercials,” Sullivan says.
When the company opens a new property in Atlanta, the DJ moves there and talks about his experience on air in an effort to generate excitement and lease-up interest. And, just to ensure that Johnny O. knows his stuff, he has spent time at Gables University.
“It worked, and we got a lot of promotion,” Sullivan says. “We opened a lot of these lease-ups when the world was starting to go wrong in Atlanta.”
But it’s not all that Gables has done to promote its lease-ups. It’s made deals with nearby property owners so that it can use their space for signage. In return, it may provide something like landscaping services. And it’s bringing out its best talent to try and keep perspective residents in their units—something it has identified as a key in successful lease-ups.
So how has all of this attention helped? In a market where concessions are two to three months, Gables is still offering concessions of about two months. Sullivan doesn’t know when the concessions will end, but she does see a light at the end of the tunnel in new lease-ups. Gables only has a few more properties in lease-up in its portfolio. Everything in its pipeline is now in lease-up and, like many developers, it doesn’t have any shovels in the dirt right now. So Sullivan’s team should get a break soon.
The Gables leasing team won’t be the only one getting a break, though. With no new buildings to hype, Johnny O. may not have to pack his bags anytime soon either.