Benchmarking Amenities to Determine Their True Value and Price

Apartment residents today are quick to say what amenities they most prefer. While surveys offer great insight, the ultimate way a renter communicates interest with certain features is by signing a lease. An amenity rich unit that sits vacant on the market too long is an indicator that the price may be too high. A unit’s amenity value and how to price it is often debated in multifamily board rooms. Generally, amenities are just shy of 6 percent in total rent revenue, says RealPage, Inc., head of data science Rich Hughes. Depending on the market, a community feature can bring $15-$80 in additional rent per month, according to a National Apartment Association study released earlier this year. A cluster of unit amenities like new granite countertops, hardwood floors and balconies typically generate about $50 per month. By benchmarking units and their specific features within a property and comparing transaction data, multifamily operators can begin to understand amenity values and pricing, Hughes says. RealPage’s revenue management software can perform an amenity analysis that considers how well a unit leases at an established price by comparing the amenity type and days on the market to a unit that doesn’t have the same feature. Comparing units with amenities to those without offers clear picture of value The information is particularly helpful when developing new properties or rehabilitating others in what has become an intense amenity-driven market. “This is about looking at what makes individual units unique or preferable and more desirable as a home, and we’re making sure we’re pricing those right, putting the right things in,” Hughes said. “It’s something, because it’s not as volatile as other pricing components that often gets overlooked.” Traditionally, properties have made the mistake of assessing an amenity’s potential market value based on investment cost and ideal payoff time...