The Amenities That Drive the Most Value
We’ve seen our fair share of ridiculous amenities over the last few years. But, we’ve also seen amenities that grew into incredible value-adds that are nearly standard across the apartment industry.
When it comes to amenities, follow the golden rule: if it drives value and requires little up-front investment (in both effort and money), give it a shot. Like any marketing strategy, you don’t know until you try.
But, for those that are a bit more skeptical and have less wiggle room in terms of time and money, you want to know that something works before implementing – I don’t blame you! That’s why, this month, NAA put out the results of an incredible research study identifying top amenities and ranking them based on their impact on revenue.
Here’s the link to the full study, and a short recap below:
When it comes to fitness
- Fitness centers are a must-have
- Fitness and wellness-related amenities ranked highest in terms of percentage of residents that are willing to pay more (specifically for fitness classes and walking trails)
When it comes to the individual apartment
- Owners most frequently upgraded units with washers and dryers, followed by high-end kitchen appliances and hardwood floors
- A recent resident-facing study by J Turner Research discovered that residents would pay a premium for hardwood floors (+$75), a balcony (+$50), and granite countertops (+$30)
What amenities drive revenue
NAA’s survey determined that the top three amenities that significantly influence revenue and rent increases are as follows:
- Pet friendliness
- Fitness centers
- Swimming pools
Although business centers and other common areas (like outdoor landscaping areas) remain on the list, it’s easy to see how other life-simplifying amenities are climbing the ranks. Things like package services, text notifications, and of course, moving concierges will continue to be in demand in the future. However, there’s no doubt in my mind that we’ll continue to see nail salons and astrologers pop up every once in a while.
Measuring the ROI of an amenity
Measuring ROI on any amenity is usually pretty simple. Calculate the total costs of your additions and then calculate how much each specific addition affects rent in a positive dollar amount.
But, when you start to get into the world of service-based amenities, the calculations can get a bit murky. It requires additional measurement strategies, not just pure numbers that are cut and dry.
You need to know which behaviors you want to affect by adding Amenity X. What actions do your residents need to take for you to create engagement or revenue? Maybe it’s using the pool, maybe it’s signing up for a swim class, maybe it’s renting out the pool area for a night, or maybe it’s posting a picture of kids having fun at the pool on a sunny day. What constitutes value for your business may differ from community to community.
You also need to understand what you can actually measure versus what you can actually control. A few places to start when it comes to measurement include:
- Net Promoter Score (NPS) – how likely is your resident to recommend your community to a friend? We use this at Updater as a user-happiness benchmark, as this is a widely-accepted form of measurement.
- Cost per amenity
- Rent increase per amenity
- Occupancy rate before amenity
- Occupancy rate after amenity installed/upgraded/launched
- Resident lifetime value
- Retention rate
- Opportunity cost of installation
Amenities can exist in many shapes and sizes, often covering a wide range of lifestyle habits and resident requests. At the end of the day, before you launch – or even consider – anything new, make sure to take into account each addition’s effect on rent and occupancy.