Attracting new tenants has always been an integral part of any successful property management program. However, the traditional methods of differentiating your property—superior customer service, curb appeal and promotional offers, for example—are no longer sufficient to attract and retain tenants. With more prospective tenants filtering for apartment communities online, differentiation has taken on an entirely new profile. Here, we explore some of the new marketing practices in multifamily units.
The self-guided tour
The opportunity to personally interact with prospective tenants and provide tailored tours has always been the primary method for signing leases. However, staffing adequately to be able to provide tours is challenging when the demand is unknown. Overstaffing increases expenses at a time when margins are becoming increasingly thin. Understaffing, though, may result in poor first impressions and lost prospects. That’s why self-guided tours can be a boost.
In theory, there are an unlimited number of slots during the workday (generally 8:00 a.m. to 6:30 p.m.), as there does not need to be a dedicated leasing agent available for each tour. Prospective tenants expect instantaneous responses to their inquiries and such tours allow for this spontaneity without delay. Staffing needs are more predictable as prospective tenants need only check in with the leasing staff prior to beginning a tour. The tour can be tailored specifically to meet the time constraints of the tenant, and exceptionally long tours do not derail future appointments of the leasing staff.
However, multifamily living is not exclusively about renting apartments. More and more tenants are searching for apartments that meet not just their housing needs but provide a true community where they can thrive. That includes places that offer social interaction, environmentally friendly living and charitable events that give back to the neighborhood. Self-guided tours, while convenient, prevent the ability to accurately address the needs of prospective renters if we don’t have the opportunity to interact. With self-guided tours, we sacrifice the opportunity to connect with people and showcase superior customer service that is often a differentiating factor in attracting a tenant.
As self-guided tours are relatively new, it’s unclear how they will fare against traditional touring methods and which method will result in a higher rate of closings. Perhaps self-guided tours will be a nice supplement, but not replacement, of traditionally guided tours. This will allow potential lessees to self-filter for a method that best works for them.
Cultivating a community for tenants is much more than hosting the occasional happy hour. Budgeting for a quarterly tenant event has given way to more sophisticated interactions. In many ways, large apartment communities are a club with exclusive offerings for their members.
Cross-promotion with retailers
Large mixed-use communities often have several retailers that address tenants’ needs. Partnering with retailers often provides a mutually beneficial relationship. Retailers get the added foot traffic from residents, while residents get to participate in exclusive deals. Sophisticated retailers can direct such specials to traditionally slow times so they aren’t sacrificing full-priced customers in order to participate in the program. For example, if Tuesday evenings are slow for your restaurant tenant, they may consider offering happy hour deals exclusively to residents during that time.
Looking for a unique idea for your next tenant event? Consider using the opening of a new retail store or restaurant as the next location for your tenant event. Have a soft opening at your new restaurant for tenants only. It’s a great way to host a tenant mixer while providing support for your commercial tenants.
Navigating the restaurant and retail environments is increasingly difficult for commercial tenants. Providing them a small marketing platform directed toward residential tenants allows them to truly benefit from the mixed-use environment. This also gives insight into why large mixed-used landlords are choosing unique retailers over traditional uses (banking, dry cleaning, salons, etc.). Creating a unique retail environment is yet another differentiating factor that may set you apart from the competition.
One unintended consequence of marketing to tenants is the possibility that such offerings start to feel like spam.
To combat this, consider:
- The frequency with which you market. Is monthly necessary or is quarterly sufficient?
- Giving tenants the option to opt in for emails on retail exclusives.
- Using only physical advertisements (promotions in the elevator or at the mailroom).
- Placing one-time specials (a free Pilates class, half-off dinner, for example) in the welcome packet so residents are familiar with onsite retailers.
- Having a landing page on your website showcasing exclusive retail partnerships so residents can peruse at their leisure in lieu of email promotions.
Access to amenities within the club
Landlords who have many apartment communities in close proximity may choose to allow residents to access amenities in other buildings. For example, one apartment may have an exceptional pool while another community may house a significantly larger gym. By combining assets, landlords use all the amenities within a trade area and cater to a wider variety of tenants.
Retail space in apartment communities was often an afterthought in development, with proper infrastructure being postponed until a commercial lease was signed. However, as competition for residents becomes more intense, retail often emerges as a differentiating factor. As a result, more purposeful retail spaces are being created during the development phase. This means costly infrastructure, such as ventilation, grease interceptors and greater electrical capacity to accommodate restaurants, is being put into place to shorten delivery time for tenants, thereby accelerating rent commencement dates. Additionally, such retail spaces are more “restaurant ready,” something that typically commands higher rents.
Mom-and-pop vs. national tenants
In crafting the perfect retail mix, landlords are often choosing between mom-and-pop operations or large, national credit tenants. While national credit tenants pose less credit risk, mom-and-pop operations help create communities and more unique offerings for tenants. However, mom-and-pop tenants often mean more costly buildouts (with landlords shouldering the lion’s share) in order to create unique spaces. Nevertheless, living above a neighborhood restaurant or niche coffee shop is an amenity in its own right that also serves to attract tenants.
New developments can often take a year or two to fully lease up. This runway has created a niche in apartment housing, including Lyric, Stay Alfred and Domio to name a few that operate in this space. Developers are leasing full floors on a long-term basis to operators who cater to short-term renters—think consultants in town for a month or vacationers on an extended stay. These renters want the home experience they can’t get in a hotel, and higher-end apartments fit that niche perfectly. Their offerings are consistent, and the standards are on par with a hotel.
However, the apartment setup allows for greater flexibility, offering kitchen, laundry, bedrooms and greater square footage. In exchange, developers get the rental income during lease up as well as the foot traffic and exposure to short-term renters who may turn into long-term prospects.
Housing short-term rentals within the same footprint as traditional apartment leases may have some unintended consequences, though:
- Less control over who has access to the building. With frequent turnover, staff must be vigilant about key card/fob access.
- “Training” short-term renters to work exclusively with the operator (versus taxing the onsite property management staff).
- Greater wear and tear on the apartments. With such short-term rentals and frequent turnover, common areas may quickly adopt a lived-in feeling despite it being a new development. That could lead to more costly operating and/or capital expenses.
The rental environment is changing with the lines being blurred between short-term, long-term, hotels and the multifamily experience. Efforts to attract new renters have given way to innovation and unique marketing that has completely altered the landscape for multifamily.