For decades commercial real estate amenities have included standard features like a gym, pool, work hub, and clubhouse. These common areas are meant to offset the downsides of apartment living by allowing tenants to live a more desirable lifestyle – one where exercise, relaxation, work and entertaining are still possible despite having a smaller living space.
Homeownership has been in decline for at least three generations. Economic trends continue to keep more people renting for longer periods of their lives. Adding to the issue, homes are harder to come by, student loan repayment makes applying for a mortgage impossible, and many younger Americans are simply delaying starting a family and don’t need the space. These trends make apartment living a more practical choice.
As a result, the bar has been raised for urban living and working. Commercial real estate, from office to multifamily, is experiencing an unprecedented amenities craze. And the pandemic has only amplified it. Commercial office space has had to adapt to the new push for working from home by increasing their amenity offerings. Multifamily has also entered a race — both to get units built fast enough to meet the demand and to keep up with the rising expectations of tenants.
But the amenities you might be offering — those gyms and work hubs and even your pool — may not cut it anymore. Simply offering a standard, predictable list of amenities doesn’t mean much if they’re not the ones your future tenants are looking for. So that begs a new question. If more and more Americans are renting longer, what are the amenities you need to offer?
Your Office and Apartment Amenities are Moving Outdoors
It turns out you may not need to rethink what amenities you offer, but rather where you offer them. All of the standard features that have made up your go-to amenity package in the past are moving outside. Tenants have come to appreciate the benefits of spending time outdoors and are looking for ways they can enjoy a backyard atmosphere while still renting in the center of the city.
People want what is outdoors to be on par with what is indoors. Gone are the days where developers can shrub up their property with landscaping and call it good. Outdoor space must be accessible, usable, and exciting in order to generate a tangible return on investment. Both office and multifamily tenants are looking for (and expecting) the ability to carry out their day-to-day with some fresh air. Kitchens, workout and meeting spaces, even spas and private work pods are must-have outdoor amenities.
Outdoor Amenities are the New Frontier
In our experience, outdoor amenities are the best way to distinguish your property and add exponential value. Factoring in the increased revenue they generate, outdoor amenity spaces pay for themselves within a couple of years. They are the most marketable portion of the property because they are the most visible, unique, and exciting feature.
Outdoor amenities are exciting because they are still so uncommon. In a small to mid-size urban market, you’ll likely struggle to point to more than half a dozen inspiring examples of outdoor amenities. Often misunderstood and mismanaged, they are difficult to pull off. They require information that isn’t widely known and expertise that is rare.
In part due to their rarity, outdoor amenities are often viewed as more luxurious. Think of the higher end hotels and luxury resorts you have seen or visited. What do they have in common? Inspiring outdoor space. While some take advantage of their location and surrounding context, others are destinations in and of themselves. When your tenants see that they can have that quality of an experience in their daily lives, they’ll be sold. In fact, outdoor amenities are the quickest way to selling a luxury, resort-style lifestyle at an attainable price. With access to unique, one-of-a-kind experiences, the office becomes more appealing than working from home and renting an apartment becomes a lifestyle choice instead of an imposed reality.
This is why we’re constantly advising our clients to get serious about their outdoor amenities. It’s your greatest opportunity to be creative and unique with your designs — and the easiest way to set your development apart from other buildings. We know today’s architecture is limited by code requirements and budget constraints. This makes it difficult, if not practically impossible, to create exciting properties for anything other than the highest asset class. But, outdoor space can be the great equalizer. The difference in cost between boring and creative outdoor space is less extreme. And there are far fewer codes and regulations. A lack of imagination and awareness is the only thing holding back most properties from achieving a higher level of outdoor amenities.
Outdoor amenities are the new frontier of competitive real estate development. There is much to explore and so much untapped potential. But, like the frontiersmen of the past, it will be the most fearless architects and developers that reap the benefits of being first to the scene.
Get With the Times (Your Investors Will Thank You)
Our clients used to come to us with new projects saying, “We want this one to be good, but not super expensive.” They were worried about the impact of outdoor amenities on their bottom line, and rightfully so. Rooftop amenities were relatively new in most locales and, however exciting, carried some risk.
But we’re hearing less of that now. The new client mentality is different. “We need this to be a standout, creative, one-of-a-kind,” they’ll say. Having witnessed rooftop amenities and outdoor living experiences contribute to the runaway success of urban development projects, we’re excited to see this change of perspective.
Rooftop and outdoor amenities should not be seen as an “extra.” They are very much an investment. You’ll get out what you put in, and then a lot more. Outdoor amenities are the new frontier for commercial real estate development. Ready to explore some possibilities? Contact us now and we’ll guide you through the process.