Multifamily operators understand the ever-evolving challenges of staying competitive in today's market. Value-add redevelopment offers a powerful strategy to maintain relevance, attract quality residents, and generate strong returns for investors. CBRE’s multifamily underwriting report for the third quarter shows improving market conditions and strong potential for value-add strategies, with the unlevered internal rate of return (IRR) falling from 10.21% to 10.01%.
By refining spaces that resonate with today’s renters, owners can transform properties into thriving communities that stand out in competitive markets. Here are a few tactics for value-add redevelopment.
1. Don’t Underestimate the Power of Curb Appeal
Each value-add project requires a tailored approach that considers property-specific factors, market demands, and budget constraints. The first step to securing buy-in on redevelopment projects is to evaluate a property's competitive position in the market and its enhancement potential.
Consider how the community looks and feels from the moment you drive up. What’s the curb appeal of the property? Is it aesthetically pleasing? Does it have updated landscaping and flowers? What do prospects see on the tour? Are the amenity spaces and leasing offices clean and modern?
From my experience, first impressions matter. Therefore, every touch point—from entrance signage to the leasing office—should reflect the caliber of experience you want to deliver. At Fogelman, we call this the “front door.” We, alongside our partners, have strict standards for making sure our properties are inviting and well-maintained throughout. For example, we ensure our properties are clean and feel inviting. We also use high-quality materials for optimal performance, whether it’s Edison lighting, architecture, or synthetic turf.
Redevelopment decisions also hinge on the type of investment required to elevate a property within its asset class. Some properties only require cosmetic improvements, while others may need more substantial structural updates. The local market dictates renter expectations, so property updates must be relevant within the competitive subset, including new developments and established communities.
2. High-Impact Amenities Remain No. 1
Deciding which amenities to introduce or upgrade is a balancing act between enhancing the resident experience and achieving a on investment. Redevelopment teams should start by researching current resident demands within the market, and then evaluate the cost of implementation. Amenities that reduce operational costs or have high demand, such as in-unit washers and dryers, are generally good investments.
Today's renters gravitate toward spaces that support their lifestyles, particularly those facilitating fitness, socialization, and wellness. High-value amenities often include fitness centers with flexible workout space, resort-style pool areas with cabanas, and outdoor grilling pavilions and multi-use common spaces with games or entertainment. Creative use of space, like transforming underused tennis courts into pickleball courts, can boost appeal while being mindful of both space and budget.
In addition to same-class properties, I often look at new developments and luxury properties to gauge what amenities are offered at a higher rental rate. Some aspirational amenities I’ve seen recently are keyfob-activated beers on tap, synthetic turf for bocci ball or corn hole, and community rooms fitted with Scrabble or chess tables. Not every trendy amenity delivers equal value, though. Take electric vehicle charging stations, for example—while appealing to certain demographics, they require careful consideration of power infrastructure and cost recovery. Teams should analyze each feature's financial viability within their specific market and asset strategy, by reviewing the demographics and estimating the likelihood that it will increase resident satisfaction and retention.
3. Invest in Unit Upgrades Where ROI Is Direct and Tangible
The most measurable IRR often comes from unit interior improvements. It is the one mechanism within the capital platform that you can directly connect the investment in the unit with the cash return. Strategic upgrades, such as modern appliances, premium flooring, and smart-home technology, can justify meaningful rent increases, especially when elevating Class B- properties to B+ or A- positioning. To create a data-driven strategy, redevelopment specialists should track cash flow improvements against specific enhancements.
Unit upgrades shouldn’t be limited to aesthetics. Today's renters expect functional spaces in their homes, too. Modern units should incorporate tech-forward features throughout the space, like USB charging ports in convenient locations, smart thermostats for comfort and efficiency, and keyless entry systems for security and convenience. Such upgrades streamline daily living and increase the appeal of properties, especially in the most competitive markets where we’re seeing more renters by choice.
4. Secure Stakeholder Buy-In With Compelling Imagery and Benchmarks
When undertaking a value-add project, stakeholders must have a consensus and common understanding of the investment and potential value in return. Building confidence and excitement around a project’s investment thesis requires compelling visualization. Redevelopment experts use before-and-after imagery, detailed renderings, and case studies to illustrate transformation potential. Visuals provide a tangible projection and help partners understand how their investment will enhance both property appeal and value.
Remaining competitive with new developments can be challenging, especially as these properties often feature high-end amenities. We address this by thoroughly researching new developments to ensure we’re not missing key features that resonate with renters. By incorporating popular landscaping and community spaces, we can create a residential feel that rivals newer properties without a complete overhaul.
Ultimately, a successful value-add project enhances physical spaces and fosters a thriving, connected community. To determine the success of your redevelopment strategy from a resident perspective, listening to resident feedback is crucial. We’ve implemented resident satisfaction surveys and encourage our on-site teams to gather invaluable insights from conversations with tenants. The feedback loop helps us identify and address issues promptly, ensuring that residents feel heard and valued. It’s a small yet impactful way of maintaining a positive community atmosphere and keeping our properties attractive to current and prospective residents.
By focusing on the details that matter the most—from curb appeal and amenity mix to unit interiors—you can deliver spaces where residents are proud to live, and stakeholders see consistent returns.
