Research Shows Mismatch Between Renters’ Searches and Reality

NAA’s Units Magazine has an interesting piece from Apartments.com about some research they’ve done on renters’ searches. Here’s an excerpt:

Searches on Apartments.com indicate renters are usually looking for a deal that may not exist, according to a new analysis of that search data. On average, the typical user searches for a maximum rent that is less than the actual average rent for a given area. In fact, there is roughly a 12 percent premium between average one-bedroom rents and the average maximum rent for which searchers on Apartments.com look. Searchers want the best price—and who can blame them?

Indeed, the more expensive an area is, the more searchers look for lower rental costs. Areas that have average rents between $2,000 and $2,500 have an average premium of real, over searched-for, rents of 22 percent. The premium for areas that average $1,000 to $1,500 is only 8 percent. No area that averages more than $2,500 in one-bedroom rents has renters searching for maximums above the market average.

Furthermore, the overshooting and undershooting of rents correlates to the percentage of income spent on rent. The more expensive an area as a share of income, the less likely a renter is to overshoot rents with their max search. Linear regression predicts that in areas where a renter pays about 25 percent of their income on rent, searchers will plug in a rent that is only 83 percent of the average. At about 11 percent of income spent on rent, they match their max search with the average (Note: These rent-to-income ratios purposely exclude any instance of affordable, discounted, or reimbursed housing).

You can read the full piece here.

Lease With Your Latte?

Wood Partners has been successful in marketing some of its communities at Starbucks’ in-store or drive-thru lines. Here’s a little about their program from an article in UNITS magazine:

We partner with Starbucks often and have great success with outreach events at Starbucks locations near our communities. One of our favorite ways to outreach at Starbucks and other local coffee shops is to have a pay-it-forward event, where we purchase coffee drinks for the prospects and distribute information about our community.

It creates feel-good experiences that are memorable for the patrons and at the same time, helps us to get the word out about our new communities. I can only imagine the word-of-mouth exposure that our communities receive when the recipients of a pay it forward coffee drink share the news with friends, family and colleagues.

We had a particularly successful partnership with a Starbucks location in Charlotte, N.C. The local Starbucks named a drink, the vanilla-flavored APV Latte, after our newly opened community, Alta Prosperity Village, and we were able to advertise the drink.

Starbucks provided our team with Starbucks gift cards, and we provided our prospects with a gift card after each tour. We have found Starbucks to be a great partner and that they are willing to work with us in most scenarios. The level and type of partnership vary by location.

Get more details by reading the full article.

Enough About the Millennials – Let’s Talk About How Gen Z Will Impact the Apartment Market

Millennials have dominated the attention of the business world for so long that we’ve almost forgotten that there are other markets out there to conquer. (As a member of GenX you don’t want to get me started about how my whole generation was forgotten because we were squeezed between the Baby Boomers and the Millennials). Wouldn’t you know it, the successors to the Millennials, GenZ, are entering the rental housing market in a big way and they are starting to have an impact. Bob Pinnegar, NAA’s CEO, recently wrote about these changes for the Washington Post. Here’s an excerpt:

By 2020, Gen Z will represent 40 percent of all consumers. While most of the business insight into this generation (those born between the mid-1990s and early 2000s) has been focused on its spending habits as teenagers, its oldest members are now graduating college, entering the workforce and seeking apartment homes of their own…

Gen Z has never lived in a world without the Internet or social media. More than any previous generation, it takes for granted the availability of technology. An iPhone isn’t a technological achievement; it’s simply a part of daily life…

Gen Zers’ social media savvy also makes it critical to differentiate marketing and messaging for various channels… Gen Z uses Twitter more often than millennials, and that platform is an ideal way to reach them with real-time, immediate marketing messages such as sales offers and stories about new amenities. Instagram is for inspiration, so compelling images are essential, and Snapchat is perfect for storytelling through images…

Gen Zers were raised by the skeptics of Generation X and grew up during a recession. They are quick to fact-check claims and, as the IBM and NRF report found, “their focus is on quality and authenticity — not on marketing hype.” For property owners and managers, this means actively engaging with residents and taking a transparent approach when providing community information. Negative reviews online are not deleted; they are thoughtfully addressed.

Click here to read the entire article.

Facebook’s Latest Trouble: Fair Housing

Facebook, which along with Google dominates the online advertising marketplace, is being sued by fair housing groups. Those groups claim that Facebook allows housing advertisers to discriminate against groups like women, families with children and veterans. From a lengthy article published by the Triad Business Journal in cooperation with the New York Times:

Facebook, in response to criticism over the last 17 months, has repeatedly promised that it would crack down on advertisers who use those tools to show housing or employment ads to whites only.

But in the lawsuit filed Tuesday in U.S. District Court in Manhattan, the National Fair Housing Alliance and affiliates in New York, San Antonio and Miami contend that Facebook’s advertising platform “continues to enable landlords and real estate brokers to bar families with children, women and others from receiving rental and sales ads for housing.”

“We want the court to order Facebook to develop a plan to remove any ability for advertisers to access Facebook’s checklists for excluding groups of people in the posting of housing-related ads,” said Diane L. Houk, a lawyer for of Emery Celli Brinckerhoff & Abady. “Because of Facebook’s impact on the housing market, we’ll ask the court to implement a plan of community education and outreach to housing providers to inform them of their obligation not to discriminate.”

Kernersville #12, Rural Hall #18 in SatisFacts’ Top 25 Recommended Cities

Source SatisFacts

Satisfacts released a list of the Top 25 Recommended Cities and three North Carolina cities were included: Holly Springs (#7), Kernersville (#12) and Holly Springs (#18). Here’s how SatisFacts described their process in creating the list:

The top two factors that heavily influence the overall experience and willingness to recommend a community is the Office Staff and Maintenance. With the average for the top cities being 4.53 out of 5 vs. the national average score of 3.23 out of 5. In addition, maintenance was the second factor that set these communities apart. With the top 25 cities averaging a  score of 4.55 out of 5 vs. the national average of 3.33 out of 5. 

Methodology:

To calculate results, we used the lower bound of the “Wilson Score” confidence interval rather than the “average” to calculate recommend scores. For cities with fewer reviews, we determined, with 95% confidence, that the number of reviews was significant enough to represent the percentage the city was recommended. 

Startups Aim to Help Convert Units Into Short-Term Rentals

There are a few startup companies out there looking to help apartment management companies convert units into short-term rentals. From the Wall Street Journal:

Arlington, Va.-based WhyHotel aims to turn apartment buildings into pop-up hotels, complete with front desks and maid services, to help owners generate revenue while they are in the midst of finding full-time tenants.

YouRent.com of Miami leases sections of apartment buildings or even entire properties, bringing in designers to transform the units into hotel rooms. A soon-to-be-launched startup Parallel similarly will rent blocks of units from landlords, decorate them and rent them out to overnight guests with an in-house hospitality team.

Pillow Residential, which last month raised $13.5 million in funding, offers a platform that allows building owners to access information about Airbnb guests and see which units in their building are being rented out and when…

WhyHotel piloted its concept with 50 empty units in a Pentagon City, Va., building owned by Vornado Realty Trust . Prices were $179 to $329 a night on units that otherwise wouldn’t have generated revenue until they were rented to long-term tenants. The service ran from January through May, when there were enough tenants to bring the building close to full occupancy.

The rest of the article addresses some of the issues that arise with short-term rentals, the pros and cons from management’s perspective, and how some companies are using the availability of short-term rentals to help them market their traditional rentals.

Snapchat for Marketing Student Housing

For those of us of a certain age the whole Snapchat thing is a bit confusing. We try it and…we don’t get it. On the other hand there are lots of people, usually younger than yours truly, who DO get Snapchat and property managers, especially in the student housing space, are taking notice.

The most recent issue of Units Magazine has an article about marketers using Snapchat. Here’s an excerpt:

Rob Dinwiddie, Landmark Properties, and Barrie Nichols, University Student Living are effectively driving their brands and select community messages through timely images on Snapchat based on paid geo-targeting filters being deployed during key campus dates such as move-ins and social events.

“We created Snapchat filters with custom graphics for each of our communities,” Nichols says. “Coupled with geo-targeting that is based on popular events such as housing fairs, orientations and libraries during exam finals weeks, the results were phenomenal. Popular among students and cost effective, this form of digital marketing proved to be extremely successful. We will continue to build brand awareness and provide interaction opportunities with our target market during key times and events.”

Nichols says these also were used to launch new developments through table tents on campus, local businesses and at events.

“The evolution of this platform has been incredible,” she says. “When we started using Snapchat to communicate with students three years ago, companies were hesitant to see this as an engagement source. Now, there are more people who added us to their Snapchat accounts during targeted events than any other form of social media.”

You really should read the full article as it’s full of great info about the use of Snapchat and other evolving technologies in the student housing sector.

CoStar Getting Aggressive With Apartments.com

Today’s Wall Street Journal has an article about how CoStar is investing aggressively to expand and improve Apartments.com. From the article:

Since acquiring the site early last year for $584.2 million, CoStar has spent about $80 million to update the technology and expand its scope, deploying thousands of researchers to visit and photograph 400,000 rental properties. It even charters airplanes to circle cities in search of leads on new construction.

The site was quietly relaunched last week. Next month, CoStar will unveil a $100 million marketing campaign featuring actor Jeff Goldblum as an eccentric Silicon Valley executive touting the new Apartments.com as a “game-changer.”

The stakes in the ILS sector are high and the competition is heating up:

At the same time, landlords are spending more to advertise their apartment buildings online. According to Kip Cassino of Borrell Associates Inc., which tracks ad spending, landlords will spend $1.5 billion online in 2015, up from $630 million last year.

Not surprisingly, the competition for those marketing dollars is growing. Apartments.com competes on the national level with Zillow Group Inc. and Craigslist Inc., as well as with dozens of local sites in major cities across the country. Seattle-based Zillow, a dominant player in listings for single-family homes through Zillow.com and Trulia.com, a recent acquisition, has been buying up rental-focused listing sites for several years. Purchases have included HotPads, PostLets, RentJuice and New York-focused StreetEasy.

The rest of the article contains some interesting numbers, including what kind of revenue CoStar expects to earn on its Apartments.com property in coming years, and it also focuses on the fragmented nature of the current ILS market. Interestingly, it doesn’t mention many of the players in the apartment market like Apartment Guide, Apartment Finder and ForRent, but does mention Zillow, Craigslist and Move.com. I expect we’ll hear from our friends at the Guide, the Finder and ForRent soon in response to this.

Keep Residents Coming Back for More

PTAA member – and past PTAA board member – Rebecca Rosario has an article on NAA’s blog titled Four Ways to Keep Residents Coming Back for More:

When potential residents make the effort to call, email, and spend time at searching for a place to call home, most apartment community staffs are on their best behavior, trying to make the positive first impression in hopes to “woo” the prospect into a  lease signing, rent paying member of the community. Mutual trust is built, the future looks bright, and hopes are high for a wonderful relationship.  Unfortunately, after the lease is signed, the wooing sometimes stops. As a result, down the road the resident gives notice, serves the office with papers, and the sad fact is they want to end the lease agreement. Similar to a divorce, ending the relationship can be a painful, expensive process.  You ask yourself, where did I go wrong?

Proactive property managers, and savvy staff know how to not only take care of the obligatory tasks of handling resident(s) needs, they are remarkably good at keeping them (residents) coming back for more and encouraging their friends and coworkers to do the same, creating new resident referrals. –

Visit the blog to see Rebecca’s four ways to keep your residents coming back for more.

Catering to Cyclists

A new trend in apartment development seems to be targeting the cycling crowd. From a story in the Wall Street Journal:

Seattle’s Velo building in Fremont is built right off the Burke-Gilman bike and recreation trail. Opening this weekend, the 171-unit building, like Vélo North Loop, takes its name from the French word for bicycle (the two buildings are unrelated). It offers a bike-maintenance area as well as a bike wash and storage, both in the garage and on the main level. Apartments will also have bike-storage niches.

Jim Atkins, chief operating officer and managing director of Mack Urban, Velo Fremont’s developer, says the building was built with wider hallways and doorways so residents can wheel their bikes to and from their units. Lobby fabrics and floor materials were chosen in part because they could withstand wear from bike tires. Even the artwork in the building has a cycling theme.

Rents in the building range from $1,600 for one-bedroom apartments to $2,495 for two-bedrooms. Mr. Atkins estimates that 85% of renters will be bringing bikes.

Nationally, commuting by bike grew by 62% between 2000 and 2013 in the U.S., according to the League of American Bicyclists. In 2002, there were seven bike-sharing programs world-wide offering subscription-based, short-term bike rentals, according to MetroBike, a bike-sharing consultancy. Today, there are 750…

In some cities, bike infrastructure is prompting real-estate development. Many of the newest luxury apartment and condo buildings in Minneapolis are rising along the city’s Midtown Greenway, a 5½-mile-long bike and pedestrian trail converted from an abandoned rail corridor. Soren Jensen, the executive director of the Midtown Greenway Coalition, says that historically, buildings in the area were constructed with main entrances facing vehicular roadways.

You might think that this doesn’t apply here in the Piedmont Triad, but Greensboro’s Greenway is already generating interest from developers – in fact one of the stops on this year’s PTAA Bus Tour was the Greenway at Fisher Park – and Winston-Salem has a greenway that is partially developed. In fact you’d be hard pressed to find a municipality that doesn’t have the development of walking/biking infrastructure as part of its comprehensive plan. Add to that the demographic trends we’re seeing and catering to the cycling community starts to make all kinds of sense.