June 27, 2022

Tenants Facing Higher Rents May Start Pressing Apartment Owners To Provide More Value

With rents rising, apartment industry executives say tenants may start expecting more value for their money.

How that value manifests may come via the technology and amenities apartment owners offer, panelists said during a session at the National Apartment Association’s annual Apartmentalize show in San Diego. But no clear answers on what more value may mean emerged during a discussion that brought a range of possibilities.

“It’s been a phenomenal 18 months” for the apartment industry, Helen Garrahy, senior vice president of portfolio management with Chicago-based investment management firm Heitman, said during a session titled “Shifting Dynamics in Resident Expectations, Connectivity and Technology.”

But Garrahy said renters are now being hit with financial pressures from many angles, including higher rents, which she and her fellow panelists agreed will mean apartment dwellers may want more for their money.

Value could include how renters can save on spending elsewhere such as for utilities, Garrahy said. That may mean incorporating more energy monitoring into apartments.

Mark Zikra, head of innovation for technology advisory firm August Hill, said renters are starting to ask more questions about how to establish more community where they live. Value also could come through incorporating more technology in apartments related to the sharing economy, including rental programs for cars, scooters, gaming consoles, furniture and even picnic supplies.

“People want to own less but do more,” Zikra said.

Dana Hill, senior director of engagement for Atlanta-based property management firm RangeWater Real Estate, said one of the most popular amenities this year is having a small convenience store on-site where residents can shop without having to leave the property.

Heitman brought Stockwell, a smart store startup by former Google employees, into some properties and did well, Garrahy said after the session ended.

The panelists agreed that understanding what renters desire requires taking a deeper look at the demographic makeup of residents.

Older residents may want the same amenities as younger people but use them differently, Hill said. She cited a movie theater as an example. Older people will want to watch a movie, while younger residents may see the theater as a large room for gaming.

How technology plays into the equation generated considerable debate. Zikra noted that more money has poured into property technology now more than ever, but the real estate industry is still moving slowly in adopting it.

Garrahy countered that there is reputational risk if the technology fails, which could hurt a property’s underlying revenue. “We want something that works,” she said.

Alex Samoylovich, founder and co-CEO of rental property management software company Livily, said the challenge is quantifying what works and what doesn’t work.

Smart access control for apartment units, though, exploded during the pandemic, Samoylovich said after the session. With the technology, a potential renter is sent an access code that they can use to view an apartment without a leasing agent letting them into the space, which helped during the pandemic months when contactless interactions were key.

“Now it is a must for new construction,” Samoylovich said.

By Richard Lawson
CoStar News