Multifamily amenities and shared spaces drive connectivity, wellness and flexibility for urban lifestyles.
Even with lofty expectations for 2022, the U.S. multifamily market is off to quite an impressive start. The sector saw investment increase 56% in Q1 2022, the strongest first quarter ever recorded, according to CBRE. Multifamily accounted for a whopping 37% of total commercial real estate transactions in that period, nearly twice what the office (21%) and industrial (20%) markets produced.
Perhaps the most impressive figure is the multifamily record for four-quarter absorption total (695,100 units) in Q1 2022 (absorption represents demand contrasted with supply). With such strong fundamentals, multifamily is poised to deliver on its 2022 promise. A reduction in bidder pools and rising interest rates will present challenges though, as the year passes the halfway point.
Smart multifamily owners and operators are staying competitive by adjusting to increasing emphasis on amenities and shared spaces in urban environments. And for the industry’s expectations to be fulfilled, buildings must boast more than a well-appointed conference room. Urban renters are seekers, and in a world that changes faster each year, there’s a lot for owners to keep up with.
Changing world, changing tastes in-unit
The COVID-19 pandemic hasn’t impacted the multifamily market in the same way it forced the office and hospitality sectors to adapt. But some of the pandemic’s biggest impacts on office and hospitality – the shift to remote work and wellness – are playing a role in multifamily. If anything, the pandemic has served as an opportunity to reset how multifamily operators prioritize amenities.
For those working remotely, demand now exists for additional rooms and space in individual apartments as well as elsewhere in the building. These spaces must be connected to how residents work and play. This means studios won’t draw as much interest as apartments with extra rooms for a home office or yoga. Like the office sector, multifamily will see more demand for flexible and larger spaces and amenities that are wellness focused.
Young professionals are driving much of the multifamily growth in urban markets. The youngest generation of adults, Gen Z, was the only age group to increase renting activity in the last year, especially in San Francisco, Manhattan, Boston, Philadelphia and Jersey City, N.J., according to RentCafe. These renters are looking to enjoy city life as well as employment opportunities, and there are plenty of opportunities for multifamily owners and operators to provide them the experiences they desire.
On the other side, Baby Boomer renters are typically moving from homes they’ve resided in for a number of years and are used to larger spaces and higher-
end finishes. These might be harder to find in some urban environments, especially those properties catering to younger residents, but rest assured, older renters will prioritize what’s familiar when making their final decisions. Boomers have been particularly interested in design features like two sinks in the master bathroom, in-unit washer/dryer, high ceilings, hardwood floors, private outdoor space and ample closet space.
Shared spaces and common areas are amenities that will matter most
According to the 2022 NMHC/Grace Hill Renter Preferences Survey, respondents were less interested in nearly all traditional amenities listed in the 2020 edition of the survey. This is indicative of the shift occurring toward flexible, collaborative spaces that promote wellness and connection to the surrounding urban environment.
Multifamily operators can differentiate their properties and create unique personalities for them by building on proven amenities and purpose-fitting them for the unique aspects of their properties, urban environments and ideal residents.
In one of those growing urban markets, Philadelphia, Lyndon At The Curtis offers a curated collection of modern amenities for what urban renters want, going beyond workout rooms and repurposed bike racks.
Lyndon At The Curtis elevates the wellness experience with a full fitness center with on-demand studio, yoga studio with designated spin area and Peloton bikes with free subscription. This kind of diverse fitness offering appeals to a broader resident set. Other more leisurely pursuits are available at an increasing number of buildings such as a clubroom with a billiards table, a private screening room, golf simulator and luxe library space. Other features like a boardroom function space, private dining room with communal kitchen, dog spa and laundry room for oversized items are nice to have, while a 24-hour concierge desk is a must-have. Resident storage areas have also proven popular, particularly among older renters who are generally looking for larger spaces and downsizing from bigger or luxury single-family homes.
Additional services that support convenient urban living include a 300-space parking garage underneath the building; curated resident activities and programs; electric car charging station; and housekeeping referrals. It’s also increasingly preferred to have windows that open, private terrace/balcony access, conference room availability and a lounge in the amenity center.
Managing shared spaces for ease, safety
Of course, all these extra spaces must be managed, and in a post-pandemic world, that means ensuring social distancing and cleanliness protocols are appropriately enforced. Restricting the number of people in a space at certain times and providing sanitary wipes, hand sanitizer and twice-daily disinfection of the space can ensure residents stay healthy and confident.
There are plenty of other considerations for winning multifamily amenities. Ensuring adequate ventilation in urban environments requires caution because of pollution levels and taking precautions like limiting occupancy in common areas where outdoor ventilation can’t be increased can contribute to overall health. Increasing air filtration is also a positive step in buildings that can accommodate altered HVAC designs and thicker filters.
A safe water system and promoting proper cleaning can also ensure safe common spaces. Multifamily operators should also consider modifying layouts along with installing physical barriers and conducting more regular and robust maintenance and inspection visits. These steps are necessary because the pandemic has altered how multifamily owners operate.
The manner in which the pandemic has shifted the multifamily sector brings to mind the real estate marketing line, “No matter where you live, where you live has never mattered more.”
When it comes to amenities that address what urban seekers need, those that promote connectivity and flexibility in relation to wellness and their urban environment will matter more, and those multifamily operators offering them will be in the best position to weather or capitalize on whatever comes next.
Rich Gottlieb is President and COO with Keystone Development + Investment.