All-Inclusive Services Define New Apts.

NEWPORT BEACH, CA-Trent Brooks, COO of Lyon Communities here, oversees the business operations of the firm's multifamily portfolio, which includes a market capitalization of $2 billion and thousands of apartment homes in California, Colorado, Atlanta and Florida. GlobeSt.com caught up with Brooks recently to discuss trends he's seeing in the multifamily arena and the differences between services and those all-important amenities.

GlobeSt.com: What do you see as emerging trends in multifamily?

Brooks: One that really stands out is that Gen-X and Gen-Y individuals are showing an increasingly higher propensity to rent rather than own. There's been a demographic shift from entry-level ownership to rentals. Partially, as a product of that, we're seeing either rehabilitated or newly developed properties become more appealing to that demographic group because of the scope of amenities and services offered rather than just a place to sleep.

GlobeSt.com: Will the sector remain strong as the single-family market continues to recover?

T.B.: We think about this a lot, but the market fundamentals say yes, that sector will remain very strong. Demand continues to exceed supply, and the affordability gap seems to favor rental housing over homeownership. Also, with the change in demographics, a large percentage of the population coming into the housing market is choosing rental housing. When you look at supply and demand, affordability and demographics, we believe the sector will remain very strong, and the multifamily market is performing very well, which is good for the economy as a whole.

GlobeSt.com: What's new in multifamily amenities?

T.B.: That's a three-part answer. First, there's a distinction between services and amenities. A pool is an amenity, but maid service I think of as a service. What we're offering our residents is a broad menu of services, including concierge, cleaning services, dry cleaning, pet grooming and walking, customized interior design. These are services that weren't a part of a renter's experience customarily. They're something you would see at a high-end resort.

We're also offering a greater menu of traditional amenities: a WiFi lounge, pool, and weight room aren't new, but the scope has definitely been updated. We're offering saltwater pools and outfitting our fitness centers with state-of-the-art equipment. This is for the residents that fit that demographic where they want to go to a really nice health club, but they're now getting that onsite. We're also including a lot of properties that have full, resort-style rooftops: 15,000 square feet with fully integrated amenities that include bowling lanes, a movie theater, demonstration kitchen, sports bar, outdoor gathering areas, high-end barbecues, outdoor kitchens. You walk into this environment and you really have a highly amenitized package available to the residents.

At Lyon, we don't charge extra for any of those—it's part of being a resident. This is a great package of services and amenities and it doesn't cost you anything. Another area we are fond of is pet services: a pet spa with grooming areas, and we're retrofitting our more seasoned properties to convert a laundry room or another area of the property for residents who own pets. It's been really well received and there's no charge. We're high service, but there's not a high point on rents. This is a long-term proposition, to encourage residents to stay longer and have less turnover. They're happy to refer other individuals as well. The validation of that approach is that we put it out there and we've had a great response.

GlobeSt.com: What developments are you seeing in multifamily financing?

T.B.: This is always evolving. There is an ample supply of mortgage capital from agencies, banks, life companies, CMBS—a good, diverse, deep supply of mortgage capital, not so deep that people are making bad lending decisions, but deep enough that there's capital available to borrowers. Also, life companies that have been traditionally low leveraged are becoming a bit more flexible at a time when the agencies are decreasing flexibility. And the agencies are expanding their product menu and becoming full-service platforms as opposed to just Fannie and Freddie—more of a one-stop shop rather than just providing capital. As far as new product developments, there was a CME program just introduced where you can lock in the Treasury. It's really pioneering in that you can take the Treasury yield out of the equation and lock it in—pay the standard rate-lock fee. It's a very nice feature just rolled out in the last 60 days.