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Using Community to Increase ROI for Multifamily Buildings

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If that last year-and-a-half has left you feeling lonely, you are not alone. Even before the pandemic, research showed that people are increasingly feeling lonely. A global lockdown and an end to almost all in-person events certainly increased this problem. The days working from home kept people well within reach of their neighbors, but certainly didn’t help them connect. Now, buildings are stepping up to combat this through a focus on community, which, interestingly, also bolsters their bottom line. As Mark Jensen, EVP of investments at Colliers said, “Community is going to be an amenity.”

The idea of community in multifamily is moving up the list of reasons residents are attracted to a place. “​People aren’t just looking for a place to sleep, they’re looking for a place to belong,” explained Ben Pleat, CEO & Co-Founder at Cobu. Cobu, a technology that helps increase resident satisfaction and retention by creating community, is often downloaded before residents move in. The result? “New residents are welcomed and integrated into the community before they’re even unpacked. That feeling of community grows attachment and belonging, leading to happier residents and stronger renewals,” said Pleat. This also leads to happier owners as the national average unit cost of a turnover is equal to three month’s rent, although varies greatly.

Being part of a community fights against feelings of isolation. Social isolation can be measured by inadequate quantity or quality of interactions with other people at an individual, group or community level. Beyond frequency of interactions, internal or perceived social isolation reflects an individual’s perceptions of trust, loneliness, and satisfaction with their relationships. In a 2021 study about the effects of social isolation on well-being and life satisfaction during the pandemic, 100 percent reported at least some social isolation. While many of these studies focus on the elderly population, young adults reported the highest levels of isolation in this recent study. This may be surprising as younger adults have larger social networks; however, quality may hold more value than quantity.

This same study also discovered associations between social isolation, community, and satisfaction with housing. Analysis revealed those with higher levels of social isolation reported less connection to their community and had lower levels of satisfaction with housing. Francesca Loftus, Co-founder of HOM which was recently acquired by Alfred where she is now Sr. Director of Community, has seen this reflected in surveys of their residents; “There’s a direct correlation between the depth of engagement inside a property and their willingness to renew their lease. We typically see that more than 60 percent of folks list community as their number one reason for renewing.”

There’s not much room for debate around the value of community in both residents’ well-being and as owners look to the future, it needs to be part of the conversation and the budget. “As we navigate this ever-changing Coronavirus landscape, maintaining stability will be a central priority for properties and tenants in the face of uncertain environmental and financial factors,” explained Marcela Sapone, CEO of Alfred, a resident management software application. “Retention strategies fall into one of two buckets: discounts or upgrades. Properties that invest in growing their offerings to serve and enhance residents’ full experience—through community engagement, technology and services—will continue to win out over those who undervalue the resident experience.”

Alfred Co-founder and CEO Marcela Sapone will be speaking at Blueprint 2021 in Las Vegas where 750 CEOs, VCs, and leaders from across the real estate tech ecosystem will be meeting for the PropTech event of the year. Propmodo readers get a special $200 discount! Click here for more info and register now.

Technology’s role in the creation and sustainment of community within multifamily buildings isn’t a holistic solution but it does create a digital layer. “Is the URL the new IRL? No. We’re a social species,” said Pleat. “The digital environment is important because it’s a way to facilitate face to face interactions and unlock latent social connections.” Pleat continued that the type of content and interests differ across their properties in 29 US States but how community is built doesn’t change.

Those moving into and staying in these residential buildings are comfortable with technology and expect it to supplement their daily activities. “Technology amenity fees” are becoming more common in these buildings. “Right now the wave is beginning to crest as more operators are accompanying their investments in smart home technology with rent premiums or technology amenity fees ranging from $15-35 per month,” said Scott Andersen, VP of Sales at Latch, a smart access solution for multifamily buildings.

These increases in price for a more tech-enabled environment are embraced, too. In fact, three out of four would accept an increase in their monthly rent in exchange for upgraded technology in their apartments and 57 percent are okay with an increase of at least $20 a month to have tech-related amenities. In a survey of U.S. multifamily renters, 86 percent of millennials were willing to pay 20 percent more for a smart apartment and 55 percent of Gen Ys would pay more for a smart locked unit.

Community doesn’t need to start or stop at the entrance or exit of a building, smart locked or not. Buildings that highlight a neighborhood’s services within a property create a deeper connection not only to the property but to the neighborhood. This can make it hard for someone to move when they’re so ingrained in the larger community. Connecting outside services around the neighborhood to residents within the building creates a new revenue stream for owners, too. Revenue sharing is common between building owners and outside companies that gain access to residents through tech. This ancillary income can have powerful effects on the bottom line of a property without much effort from building teams.

It isn’t just being in close proximity to another that helps thwart the feeling of loneliness and isolation. The quality of interactions matter a lot. Technology can elicit and promote connections between individuals but the true power of community remains in real life experiences. And, in many cases, technology makes it possible for these real life experiences to happen through introductions, scheduling, reservations, and more. “Creating a sense of family and belonging through rituals within a property gives residents comfort through cadence and stability within a property. It becomes a heartbeat,” said Loftus.

This heartbeat can be just as important to resident well-being as any other measures taken by a property. Loneliness has shown to be similar to smoking 15 cigarettes a day or being an alcoholic when it comes to a heightened risk of mortality. We have learned a lot about ourselves and our buildings during the pandemic. One of the most valuable things might be how important a community is to our health and how well-managed buildings can help. 

Interested in more?

Check out Blueprint’s inaugural October conference in Las Vegas. Learn more here.

Join us for a related webinar on Thursday, September 2 at 12pm EST. Register for free here.

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