The worlds of hospitality and multifamily are becoming more intertwined. Multifamily owners are incorporating more amenities and services into properties to drive occupancy and rents. Today, people are renting later into life and want a high-end living experience. These services include concierge services, furnished units and short-term rentals.
“The labor market and America’s workforce is still in recovery mode. As such, more people continue to rent than buy and many renters prefer to live close to a metropolitan area,” Gidi Cohen, founder and CEO of CGI Strategies, tells GlobeSt.com. “Many current renters were once homeowners affected by the Recession and these discerning tenants are used to a certain neighborhood lifestyle that exists beyond apartment walls. Getting to know their neighbors, enjoying a neighborhood park, cafe or movie theatre are all vital parts of suburban life. Where multifamily developments were once nothing more than isolated apartments, today they are seen as vertical neighborhoods, bringing suburbia to the city.”
Millennials are one of the largest segments of renters for this product. This demographic lived through the recession and has gravitated toward rental housing and smaller living spaces. As a result, the merger of hospitality and multifamily and become a new normal for the asset class. “Developers who understand this shift in real estate consumer psychology are adding hospitality features into their development plans from day one,” says Cohen. “These can include partnering with third-party vendors, re-inventing onsite amenities, and hosting events and activities that bring residents together for a common goal.”
These operational partnerships include everything from gyms to food delivery providers and dry cleaning services. These services are accentuated by communal areas on the property. “Instead of lobbies, we are seeing “lobby lounges” replete with a bar, separate coffee bar and video wall that promote social interaction,” adds Cohen. “At CGI we also plan and host monthly community gathering events with themes that speak to the residents’ tastes and serve to provide an introduction among neighbors who wouldn’t traditionally meet.”
These features have a big payoff. Compared to properties without amenities, these more hospitality-focused assets have higher occupancy and rental rates. “Multifamily residences that offer hospitality features tend to be at the top of the cost spectrum, therefore tenants are selective and discerning,” says Cohen. “The personal and professional opportunities seem to outweigh the higher cost for these renters. This amenity trend is so widespread that a high ratio of renters will only consider living in a community that boasts many social amenities. Vertical neighborhoods tend to rent first and see less turnover than traditional multifamily apartments.”