Don’t look now, but that block down the street that just went under construction? It could very well be a brand-new apartment complex coming out of the ground ready to compete with your asset. As occupancy and rents have blossomed over the course of 2011, so too has the interest in new apartment construction—predictions for multifamily development put 2011 starts at 179,000 units, according to the latest data available from the U.S. Census, an impressive increase over the 2009 and 2010 starts of 109,000 and 116,000 units, respectively. This projected increase in new product is worrying operators who may have let up a bit on site-level maintenance and cap-ex investments during the recessionary years. And rightfully so—trying to compete for Gen Y renters with brand-new communities that have next-gen amenities is going to be an uphill climb.
Say Again
Keep these three communication tips in mind during renovation.
During its 10-year renovation of apartments and common-area amenity spaces at the 2,362-unit Presidential Towers in Chicago—completion of which is planned for 2017—Chicago-based Waterton Residential has discovered three keys for managing resident expectations: communicate, communicate, communicate.
1) Listen up. “With any cap-ex investment, you want to figure out what your demographic needs, and that’s what you should be renovating to,” says Waterton COO Greg Lozinak. “Whether it’s a clubhouse, a residence center, or a coffee bar, staff those spaces with associates to interact with residents and respond to their questions quickly.”
2) Keep talking. “Over-communicate across all channels,” Lozinak says. “That’s really how to sum up resident management during a renovation: Over-communicate with all of your outreach, whether it is putting fliers under the door, including letters with rent statements, or providing updates via Facebook or Twitter.”
3) Get social. Indeed, for operators engaging in common-area renovations, resident portals and Facebook and Twitter offer primo channels for tuning into your residents’ state of mind. As long as you know your resident demographic and communicate across lots of channels, using social media is a great way to keep the conversation going.
“Just remember that most communities have a wide spectrum of residents,” Lozinak says. “Most residents want updates via Twitter or Facebook, [but] the little old lady in 2501 may not have a Twitter account.”
Still, for apartment shops that took a pass or two on deferred maintenance during the recession, there’s a window of opportunity to make property-level investments now that will keep you looking shiny and new as the new players roll in. Here’s how three of your key team members need to respond to keep pace in the amenities arms race.
The Portfolio Manager
Critical decisions about cap-ex are going to live and die somewhere on the portfolio executive’s desk. Deciding what communities to invest in—and when—requires submarket and comp analysis and market intelligence regarding what types of development projects are coming on line.
“In any submarket, we take a look around to see what is available from the competition versus our offering mode,” says Jeff Prosapio, director at Naperville, Ill.–based Marquette Cos., an owner/operator with 8,500 units under management. “We pretty much stack it up on a head-to-head basis with all competing product. That said, keep in mind that suburban versus urban situations are very different. In an urban market, where there are a lot of local amenities, you don’t necessarily have to put in a ton of features unless the neighborhood demands it.”
