Do Amenities Really Impact the Bottom Line?

Developers keep upping the ante on amenities, but does the race to build the best and most impressive features really impact the bottom line? Or, rather, do amenities produce higher rents and stronger occupancy? The question applies across asset classes, as almost all owners are participating in the amenity race. For those doing it right, however, the answer is a resounding yes. Amenities create an overall more successful asset.

“Inherently, these attention-grabbing attractions deliver an immediate increase in guest numbers and in their length of stay, which in a retail environment has been proven to increase sales,” Barry Caylor, VP of business development at design-build construction firm OTL, tells GlobeSt.com. “Retail REIT Macerich, for example, conducts ongoing annual studies that point to fountains as key elements in increasing sales by as much as $25 more per visit.”

Of course, the key is to include the right amenities that really make a property stand out. “Wow-factor water features can also deliver bottom-line marketing value,” says Caylor. “Often, OTL designs and builds fountains that launch water hundreds of feet into the air, making the property visible and noticeable to people driving anywhere near the development. This immediately creates a local landmark, and brings people in just as a large marketing sign would, but with no additional cost.”

For retail properties, amenities have a two-fold impact of improving consumer foot traffic while also attracting a higher caliber of tenant. This creates a positive cycle. “Retail owners and developers also benefit from these amenities’ ability to attract a desirable tenant mix,” says Caylor. “Today’s retailers understand the value of “water-feature-front” real estate within a mixed-use or retail environment, and will pay premium rents to operate in those high-traffic areas.”

Finally, Caylor says that amenities—particularly communal amenities—help a property to create better roots in the community. “Another bottom-line benefit comes in the form of strong community relationships,” says Caylor. “By introducing “wow” water features within mixed-use, public space, and retail environments, communities are delivering art, culture, and a sense of place that elevates the community and ultimately contributes to an economic rise for the development and its surrounding properties.”