Different renters have different needs: multifamily affordability vs. luxury
Developers and property managers have a tremendous opportunity to meet the housing needs of renters across the budget spectrum, and multifamily affordability continues to garner strong media attention.
In response to one of our recent blog posts about what renters want, one reader replied that “I think they just want a cheap and safe place to live.” Her comment shines a light on what many renters feel: Affordability is a key factor in renters’ decision-making process.
The market has room, and a need, for both affordable and luxury apartments. Let’s take a look at what that means in terms of marketing and branding decisions:
Affordable Apartment Market
Also known in the industry as “workforce housing,” affordable apartment options allow people to live closer to where they work. With more people renting nationwide, market demand calls for more properties in this category.
A Housingwire writer observes:
“According to CBRE, workforce housing, rental communities that are affordable for low- to median-income workers, has actually outperformed the overall multifamily market in each of the last four years, thanks to relatively low vacancy rates and above-average rent growth.”
In short, A-class luxury properties aren’t the only game in town. A significant portion of renters need affordable options. Wise developers and investors know how to meet this need while also making strong business decisions.
When marketing an affordable apartment, property managers will rely less on the amenity package and more on community features that make an apartment home feel welcoming and comfortable.
What do renters want in an affordable apartment community?
Safety. Our blog reader hit the nail on the head with her comment. People want a safe place to live. Added security features will go a long way toward attracting renters.
Comfort. While high-end amenities don’t make sense for properties in this category, property managers can focus on both in-unit and community features that make residents feel at home and comfortable. Think good lighting, fresh landscaping and appliance upgrades.
Location. After price, renters will look at location when making their home choice. Access to transit and nearby grocery stores, recreation and entertainment options will help sway renters in your favor, so play those up in your marketing.
Family-friendly. Many renters seeking affordable options are young families, so nearby quality schools, parks or any on-site family-friendly features will appeal.
If you have doubts about the performance of affordable multifamily properties, Multifamily Executive magazine has busted several myths on the topic that might make you think twice, including:
“When investors hear the word ‘affordable’ preceding the word ‘housing,’ some mistakenly assume subpar asset performance and quality will follow. While it’s true that housing built with [low-income housing tax credits] includes restrictions on rent, these transactions are generally thoroughly underwritten and managed by experienced operators.”
Luxury Apartment Market
While luxury apartments fetch the highest rents, property managers in this category also must compete more vigorously for new renters. Many developers have focused on luxury when building new communities, which means more competition for the same high-income renters.
A Multifamily Insiders writer sums up the challenge:
“In 2012, only half of all new apartment builds were considered high-end. In 2017, 79% of all new multifamily construction were luxury builds (Yardi Matrix).
A recent Bloomberg article aptly described the situation, ‘Tenants are gaining the upper hand in urban centers across the U.S. as new amenity-rich apartment buildings, constructed in response to big rent gains in previous years, are forced to fight for customers.’
Luxury communities are competing against more properties than ever for a small, high-end portion of the rental market.”
Owners and managers in the luxury market cannot ignore amenities and marketing strategy. Without the right strategy, your target renters will quickly find other properties that meet their needs for the same dollar amount.
So, what matters most to luxury renters:
Lifestyle. While luxury renters can afford higher rents, they expect certain amenities, features and services in return. You must know more about the renters who choose your property and meet their lifestyle needs.
Convenience. Consider features like concierge services, secure package delivery, dog-walking, on-site business facilities and other amenities that complement luxury renters’ lifestyle while making life simpler.
Location. Everyone cares about location. Play up what’s great about your corner of the city or neighborhood.
Community. We talked about this issue in more depth in our last blog. Give community-building more than a passing thought in both your amenities package and in your marketing.
Caché. Luxury renters want brands that fit their personas.
Bottom line, there are renters out there for all classes of multifamily properties. Your branding and marketing strategy will help you compete for renters across the entire spectrum. If you haven’t reviewed that strategy in awhile, it’s time for a refresh.
We specialize in multifamily marketing and branding. Contact us to find out how we can help give new life to your multifamily property’s image and message.