The new administration is providing a steady dose of disruption while a new cast of characters controls the country’s fiscal and monetary policy. Inflation remains untamed, the effects of tariffs add uncertainty, and the Federal Reserve is backing away from any significant cuts to the Federal Funds Rate.   

Numbers from the multifamily housing industry show several indicators pointing down. According to data released in February from AppFolio’s “Property Manager Benchmark Report,” occupancy has become the number one worry of property managers. The number is up by 20% compared to 2023, when inflation was seen as the biggest problem.   

The National Association of Home Builders’ “Multifamily Market Survey” shows that multifamily builder and developer sentiment about current production conditions was measured at 48 out of 100 for the fourth quarter of 2024. Anything below 50 is considered a negative rating as the sentiment tracks with lower levels of new construction starts.   

In January, Core Logic revealed the U.S. single-family rent growth slowed to 1.5% year-over-year in November 2024, the lowest annual increase recorded in more than 14 years. According to a report from data firm CRED iQ, the measure of multifamily credit distress from December to January increased 40 basis points to 12.9%.  

While buying and flipping value-add acquisitions remain constrained by high capital costs, some rental housing owners-operators are looking at smaller scale marketing moves that can reposition a property and ideally change its trajectory toward higher profits. Making a reposition work requires a clear-eyed analysis of where and what to change.   

“Choosing the best candidates means assessing all aspects of the physical asset, the industry partners we work with and the onsite staffing,” said Chrissie Valdini, Development and Project Manager for Rookwood Properties.   

Rookwood is based in Cincinnati and works as a developer, owner and manager of communities in Ohio, Kentucky and South Carolina. Rookwood evaluates its repositioning candidates by looking at key performance metrics and financial results to identify opportunities for growth.  

“Once we’ve identified our growth opportunities, the most important part and the most challenging part is getting to the root cause driving that result so that we not only take action, but we can feel confident that the action taken is going to be a solution that speaks directly to the root causes,” said Valdini.   

What Works   

The low-hanging fruit of repositioning includes the regular suspects of spiffing up common areas with fresh paint and improving exterior landscaping. Rookwood is convinced the biggest bang for the buck loops back to people power.   

“We’ve found that some of the most inexpensive, but most impactful repositioning, has to do with onsite staffing and support,” said Valdini. “If you can give your residents a top-talent, multifaceted onsite staff, it can reposition your community almost overnight by developing a local reputation for delivering on promises, caring for the families living in your community, and showing your prospective [renters] the value of what they will be receiving.”   

Chicago-based The Habitat Company owns, develops and runs a mix of commercial and residential properties that include affordable housing, market-rate and mixed income communities. It’s currently working on repositioning Columbus Plaza on East Wacker Drive.  

The property offers jaw-dropping views of the Chicago River and Lake Michigan, but according to Habitat it’s also, “holding the floor for rent prices amongst its peers.” The firm is focusing new investment into unit upgrades.   

“We’ve achieved relatively inexpensive repositions by taking a more focused approach to improving a single specific area within an apartment,” said Zack Zalar, Vice President of Investments at Habitat. “Examples include appliance upgrades to replace outdated items with modern, energy-efficient models or flooring updates like switching from carpet to vinyl plank flooring or modern laminate flooring.”  

To make sure they are heading on the right course, Habitat typically starts the process with a few units to test the market response before scaling the renovation strategy to the rest of the building. They also have a four-year timetable set up for renovating their common area amenities and marketing efforts.   

Keeping Up with the Joneses  

Sizing up exactly who the competition is can be a key determining factor in knowing what to fix. “The key difference in achieving higher rent growth and occupancy is doing something that stands out in each apartment home, even if it is just one thing,” said Valdini. “Know your competition and look for the one feature, the one amenity that they don’t have, and then find a way to put it in place at your community.”   

When analyzing competition, it can be helpful to bring in a pair of fresh eyes. “The best strategy for repositioning begins with a competitive market analysis to understand who you are losing renters to and why,” said Mary Cook, President and Founder of Mary Cook Associates, an interior design firm based in Chicago. “What is the competition offering that you are not?” Doing the homework includes going off site.   

“We visit competing properties’ websites to hear what they say about themselves,” said Cook. “We look for the position they are taking and the promises they are making. Armed with all this information, we recommend a position and direction to our client, who of course has a say and the final decision.”   

Amenities Again   

Cook’s analysis includes talking to property managers about what amenities are used the most and least. Her team visits during the week and on weekends to figure out the breakdown of remote workers versus commuters. The goal is measuring fitness room usage on different days and when residents are most likely to engage in programmed activities.   

Tactics homed in amenity wars can be leveraged in a property reposition. “Even just a decade ago, amenity spaces were allocated very differently than in today’s new developments, so a key strategy with any repositioning is finding ways to maximize every square foot without sacrificing rentable units,” said Cook.   

“Through a researched evaluation process, we can strategically reconfigure underutilized common spaces to better align with market demands, transforming them into highly functional, sought-after amenities that enhance the resident experience and keep properties competitive.”   

Sometimes, a simple change in amenities can make a big difference. “Adding an outdoor pickleball court to Northland Center, outside of Minneapolis was the best and most cost-effective investment I’ve ever made at any property,” said Ryan Pires, an SVP at KBS. “Since pickleball is the fastest-growing sport in the U.S., I’ve looked into adding it at all of my other properties, but you have to have the right amount of parking to support it.”  

Dos and Don’ts   

Cook cautions owners-operators about working with designers with a limited vision. “A common mistake when repositioning interiors is using a marquee-name residential designer with a signature look or opting for a certain style just because it’s trendy not because residents necessarily relate to it,” she said. “Trends fade faster than well-thought-out, targeted interiors that are highly functional, beautiful and meet the needs of residents.”  

Where value-add deals are often put together with a quick flip in mind, repositioning usually works better in a buy and hold approach for the asset. “We acquire and develop multifamily communities to hold and achieve long-term, stable growth,” said Valdini. “This means that we have a bit more tolerance for slow and steady repositioning strategies than many of our competitors, but it also means that we are built to sustain many different market conditions.”   

Habitat also takes the long view as evidenced by thoughts from their late Chairman Daniel Levin who said, “No project is only an investment in real estate. It is an investment in the future of the community and in the lives of the people who will live and work there.”   

A Curated Approach   

Customization to individual markers emerges as a key strategy in the repositioning equation with demographics playing the starring role. “Boomers will want something different than Gen Z,” said Cook. “Eds and meds” (residents working in higher education and medical fields) who must go into a physical place of work have different needs than commuters and remote workers.  

“Once you have a researched understanding of who you are designing for, you can accomplish a lot through the smart use of furniture, fixtures and equipment before turning to more costly demolition and construction,” she added.   

Bad Money   

Sometimes, no amount of repositioning will be enough to overcome the obstacles to the promised land of higher retention and rent growth.   

“An older vintage property in a lower-income area is going to have a more difficult time justifying major renovations due to a lower ceiling of what residents can comfortably afford to pay,” said Zalar. “Purchasing the property at the right price and implementing a carefully curated repositioning effort should lead to finding a fair ROI.”    

Valdini said: “We have found there’s always room to consider a repositioning effort, just on what scale. Before too much time and effort is spent on upgrading apartments specifically, it’s important to know your surrounding market so you don’t price yourself into a situation where your occupancy is taking a hit.”   

Scott Sowers is a freelancer for units.