With financial backers unlikely to invest in new construction markets in today's turbulent economic market, value-add rehabs are the way to go. A mix of architects and developers at the 2008 Multifamily Executive Conference shared hands-on advice for how to cost-effectively update a building to capture the desired demographic, whether they are doing a minor facelift or performing major surgery.
"How does an apartment unit with an 8-foot ceiling compete with new product with a 9-foot ceiling?" asked panelist David Obitz, principal of architect firm KTGY Group. "That's something you just can't change. So, what other things can you do to offset that and still be competitive in the marketplace?"
The panelists answered that question during the hour-long "Born Again" session. In addition to Obitz, the panel included Dave Woodward, CEO and managing partner of Laramar Communities, and Grant Barnhill, president of Boutique Apartments. The main focus of the discussion was how to redesign on a dime. Each offered his advice on upgrades that offer the biggest bang for the buck. "In our market, the No. 1 change we make to a unit would be installing hardwood floors. That drives rents more than anything," said Barnhill, whose firm takes neglected apartment buildings in the Denver market and creates highly creative, themed apartment properties.
Other suggestions from the panelists included: Applying a fresh coat of paint; adding new light switch and outlet plates; updating the lighting; swapping outdated fixtures and knobs for trendier finishes such as brushed nickel; and refacing cabinets instead of installing new ones.
In addition to updating in-unit features, a fresh amenity package is essential to competing with new product. "We try to add as many amenities as possible," says Woodward, whose firm focuses on turning Class C properties into Class B properties with the anticipation of getting a 20 percent rent increase. Fully-outfitted fitness centers, cyber cafés, wireless hot spots, and bike racks are a good place to start. Woodward was adamant about the necessity to offer in-unit washers and dryers, while Barhnill has had success sticking with the old-fashioned laundry rooms. It doesn't hurt, though, that the laundry rooms are cleverly decorated and inviting.
