In the battle to attract and retain residents, apartment communities – especially those of the Class A variety – have incorporated ever more elaborate on-site amenities.
Many of today’s residents have access to fitness centers that are the equivalent of an LA Fitness or a Planet Fitness. They might be able to unwind in a rooftop lounge with dazzling panoramic views or socialize with friends in a pool area dotted with fire pits. Co-working lounges are not uncommon; neither are pet spas, package lockers and car washes, to name just a few once-unheard-of features. Some higher-end properties even have wine cellars.
The purpose of these amenities is obvious: to build a community’s brand, to compel prospects to sign new leases and to encourage current residents to renew. In so doing, a community is then able to maximize revenues and NOI.
But today’s apartment operators should realize that offering lifestyle services – things like dry cleaning, dog-walking, and house cleaning – is an effective way to achieve these goals as well.
Building Resident Loyalty
There’s no doubt that physical assets like fitness centers, business centers, swimming pools and appealing courtyards can help in the effort to convert apartment shoppers into apartment residents. In fact, today’s prospects typically expect a community to have these kinds of features and may not sign a lease if it doesn’t.
But once they sign that lease, there’s a strong chance that today’s ultra-busy, overextended working professionals won’t use those particular amenities all that often - which can negatively impact their propensity to renew.
However, lifestyle services, through which an apartment community can help ease a resident’s daily burden, provide an invaluable service and can feature a high usage rate.
According to Spruce’s internal review of its data, apartment residents who purchase lifestyle services through the provider spend an average of $124 per month.
Critically, this usage leads to resident loyalty: Residents who purchase at least two lifestyle services have a renewal rate of 81.4 percent. When apartment renters purchase more than 20 lifestyle services, their renewal rate jumps to nearly 90 percent. By contrast, the average apartment community features a renewal rate of just 52 percent.
A Strong Impact
Looking at these numbers, it’s clear what a powerful financial benefit lifestyle services can have on an apartment community.
High renewal rates minimize rent loss due to vacant units as well as the marketing spend needed to fill those homes. Offering these in-demand services differentiates a community from the competition and enables operators to push rents for both new residents and renewing ones.
In the end, these services may not have the eye-popping appeal of a swank infinity pool or a beautiful nature trail. But they can be the unsung hero of a community’s brand value, revenue and NOI.