Coffee bars. Pet grooming stations. Fitness clubs. These are a few of the growing number of amenities that residents have come to expect and have access to as part of their leasing agreements.
And as apartment firms continue to deliver to these ever-growing expectations, property managers only now are getting their hands around how they can monetize these services, as well as possibly turn them into co-branding opportunities with service-provider partners.
“It’s less about making money than meeting how customers want to live today, which is highly amenities-charged,” says Jamie Gorski, chief marketing manager for Maryland-based The Bozzuto Group.
Among the standard amenities she says buildings can no longer be without are social-gathering areas, fitness centers and 24-hour concierge services. Moreover, one-fifth of Bozzuto’s residents own pets, so grooming services “are quite common,” although Bozzuto hasn’t gone so far as some properties in New York with separate dog elevators, parks and obstacle courses.
Brad Cribbins, Alliance Residential Company’s COO, says his company’s residents spend between $850 and $900 per year, on average, on amenity fees. And residents’ appetites for amenities “have gotten stronger,” especially among Gen Y and Millennial residents who want walkable communities and services “that matter to them.”
The juggling act for property managers, says Cribbins, is to get residents to want to spend more on amenities, but also “avoid looking like you’re trying to nickel and dime them.” So, in some cases that means rolling the cost of an amenity into a rent premium rather than charging a separate membership fee.
“The holy grail is to customize and personalize your services,” he says.
Beyond perks like fitness center access and rentable pool cabanas, Cribbins talked about offering residents discounts for nearby gyms, spas and retailers by finding willing partners. “The challenge is introducing the building to these relationships and finding a way to leverage them on a national platform,” he says. Scenarios he envisions might include a retailer like Nike marketing a promotional event through an apartment building or a financial services firm like Merrill Lynch offering its retirement and income-management services to Alliance’s residents.
Alliance’s management team has also thought about environmentally friendlier dry-cleaning services or electrical charging stations. But Cribbins says Alliance is still trying to figure out how it would benefit, financially, from such arrangements.
However, Alliance and Bozzuto executives definitely see additional untapped opportunity in the wellness concerns of their residents. Bozzuto’s Icon building in Philadelphia, for example, offers a wellness floor with a massage room, yoga studio and other unique perks like noise-cancellation equipment and special showerheads in the locker room areas.
“People are paying premiums for this,” says Gorski. And Alliance is working on a campaign that, if realized, would extend the wellness services its employees now enjoy to many of its 70,000 resident households.
Gorski and Cribbins will join other executives in discussing this topic more in depth at the panel discussion, “Win/Win: Desired Amenities + Ancillary Income,” on Wednesday, Nov. 19 at 9:30 a.m. during the 2014 NHMC OpTech Conference & Exposition. The annual event, held this year at the Hilton Orlando Bonnet Creek Hotel in Orlando, Fla., runs Nov. 17-19, 2014.
Article written by John Caulfield on behalf of NMHC.