Tenant retention is a constant struggle – especially if you are competing with great new properties that offer better amenities. Intelligent developers know that property lease-up is only half the battle. Once your development has reached stabilized occupancy it needs to stay there in order to continue to be profitable. Thus the importance of tenant retention.
Too often during the design phase, the developers focus only on successful lease-up, neglecting tenant retention. It is important to consider both what will appeal to prospective tenants and tenant retention ideas that will make them never want to leave.
The High Cost of High Turnover
The cost of replacing a tenant can add up quickly. Aside from the cost of a vacancy, you’ll face costs including maintenance and repairs, unit refreshes, and make-ready costs. You’ll end up spending more on marketing and advertising, and even concessions, leasing fees, and commissions.
If you are constantly saying goodbye to tenants and scrambling to replace them, it can be quite the burden. You can end up in a cycle of spending so much time and effort seeking new tenants that you end up neglecting your current ones.
The Role of Outdoor Amenities in Tenant Retention
Conversations about tenant retention typically revolve around improving service. No doubt, staff performance is a huge reason why a tenant moves out. But the right amenities can have a big impact as well, even in subtle ways.
Outdoor amenities are effective as new tenant sign-up mechanisms. Prospective tenants are comparing your property to others and each amenity you offer will check a box in their mind and draw them toward your property. Unfortunately, some developers believe that the value of amenities stops there. They say nobody actually ends up using the amenity spaces and so the upfront and ongoing costs of the amenities are only justified if they get people to sign leases.
Developers who embrace this line of thinking are missing out. They are forgetting the most important role that amenities play at a property: to build community. Tenants who have or make friends at their apartment community are far more likely to stick around. Having amenities that check boxes do get people to sign, but it’s the usable spaces where people make friends that get them to stay.
Lifetime Value of a Tenant vs. Maintenance Costs
Long-term tenant satisfaction is more valuable than the costs of creating and maintaining amenity spaces. Before you balk at the maintenance costs associated with outdoor amenities, make sure you factor in the lifetime value of your tenants.
Let’s say you know from your tenant satisfaction survey that the majority of your tenants are satisfied with the condition of the outdoor spaces, find them valuable, and are using them everyday. You find that there are a lot of dollars attached to how people feel about these spaces. What you will come to realize is, the quality of your outdoor amenities has a direct connection to tenant retention. When you connect these amenities to dollars and time saved, you’ll know they are worth it.
Creating Valuable, Usable Amenities
Let’s circle back to the claim that amenity spaces don’t get used. That can certainly be true. And when it happens to you it can be frustrating. Nobody wants to throw money at something that isn’t helping them reach their goals and find success.
So, how do you ensure that your money doesn’t go to waste and your outdoor amenities boost retention? It all starts at the beginning, when you set out to design the space.
Frequently, the design of amenities is solely focused on the superficial. A laundry list of amenities are provided based primarily on what the competition is offering, nothing more. These lists are marketed as “luxury” or “resort-style” when they really are barely more than the average offerings set out to reach the minimum expectations of would-be tenants.
Spaces designed with this intent are rarely used. They may check all the boxes, sure, but they fall flat when a tenant actually experiences them. You can’t just provide an amenity to look good to prospective tenants. It has to feel good to them when they are there so that it is a space they want to come back to. By focusing more on creating experiences and opportunities for people to connect, you can start to have more successful outdoor amenity spaces.
Once your tenants fall in love with a space, they’ll feel lucky to have access to it. They’ll even be bragging about these great spaces to their friends who don’t yet live at your property. They will desire to spend more time there, and they will open up to their neighbors and socialize while in the space. That will help them make friendships. With exclusive access to a space they love that is filled with people they know and care about, why would they ever want to leave?
The Bottom Line
Any outdoor amenities will automatically be a draw for the kind of quality tenants you are hoping to attract to your property. But for your tenants to truly feel at home, you need to go above and beyond the status quo.
Looking to boost your retention with creatively designed outdoor amenities? Let’s do it together.