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Plug and Play Amenities Deliver Instant Value to Tenants and Developers

The age of development is upon us. Positive macroeconomic indicators alongside what seems to be a continuously buoyant economy for the last few years have allowed developers to play out their most ambitious visions for space, from advanced amenities to entirely new concepts of how space can be used. Entire districts have sprung up, like Hudson Yards in New York or the planned “The 78” in Chicago, both products of Related’s vision for the future of cities.

But while the major development projects from city to city may be stealing the headlines, innumerable local developers have been hard at work on the other side of urban growth: redevelopment. The process of turning old, underutilized buildings into refreshed spaces suitable for their local markets is a challenging one, one that can result in properties simply given a fresh coat of paint or completely updated with all-new interiors, community amenities, and designs.

The guiding principle at the heart of all redevelopment decisions is whether or not market rents will bear the cost of adding amenities and updating interiors. It is the fundamental cap to any developer’s property plans: if the property’s combination of location and layout spells a maximum attainable rent, adding in luxurious amenities and finishes will do little to overcome it. In this way, developers are incentivized to avoid adding touches that go above and beyond what the market will bear, they will simply be pretty baubles with little economic value.

At the same time, intense competition in many markets, whether primary, secondary, or tertiary, has encouraged developers to be more creative than ever when adding amenity packages to their buildings. In all but the 100% value-driven markets, seemingly small differences in amenities packages can make a big difference in whether building owners are able to reach that maximum possible rent or fall short of the target.

For many developers, the real money gets made by first identifying an off-market acquisition opportunity, and then improving it with better management and other advancements that could be considered “plug and play”: new appliances, new flooring, upgraded outdoor elements like furniture or pool cabanas, and similar additions. These are all things that don’t require any real reconfiguring of space. For most developers, sacrificing a rentable unit to build a rec room, or completely rebuilding and updating unit layouts, is impossible to justify. Plug and play solutions like the ones above provide a valuable alternative.

One other area where developers can set themselves apart is with connectivity. Whether it is for work, studying, or recreation, most renters consume an ocean of data each month. So ensuring they are getting their money’s worth, both in terms of amount and speed, can be a solid choice for developers competing against other firms who simply provide wiring and leave their tenants to fend for themselves.

Starry is one ISP looking to disrupt the way apartment buildings offer connectivity to their residents. Virginia Lam Abrams, SVP of Communications and Government Relations for the company, explained that “Starry handles every aspect of the installation process, so it is an easy, cost-free way for apartment owners to add more value to their buildings and attract new residents. Apartment owners can, therefore, focus their dollars spent on other common area or in-unit amenities, while still providing great internet to their residents.”

Starry has the opportunity to disrupt business for ground-up developers as well as redevelopers and buy-and-hold owners. Unlike more “revolutionary” amenities like in-home help or robotic furniture, internet access is something that every building inarguably needs. While those more advanced amenities excel at providing luxurious amenity packages for the nicest buildings a given market, Starry can potentially do business with a much wider range of real estate partners. “As consumer data consumption continues to increase, we think consumers will be more aware of things like data caps and their data consumption, and will gravitate towards internet services that have no data caps, like Starry,” Virginia added.

Internet is just one component of what makes a building great, whether it is a new development or upgraded property from the 60s. But as a universal necessity, it provides an opportunity for competitive advantage that other, more optional amenities cannot match.

Associate Publisher, Propmodo Research

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Propmodo is a global multimedia effort to explore how emerging technologies affect our built environment.

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