CHICAGO, IL - The accelerated growth of the multifamily market over the last several years has some in the industry wondering how long it can last. Yet demand for new apartments is projected to continue into the next decade, according to the National Multifamily Housing Council. Research indicates a need for 328,000 new units every year through 2030, for a total of nearly 4.6 million, but the industry averaged only 225,000 completions annually from 2011-16.
Buildings that claim their own space will be the ones to succeed in an increasingly crowded market, according to Aaron Galvin, CEO and co-founder of Luxury Living Chicago, a boutique luxury brokerage firm. “This really starts with developing an authentic brand, identity and design informed by the surrounding neighborhood and target demographic,” said Galvin.
As new buildings break ground and others prepare to open their doors in 2018, Midwest multifamily experts say the following trends will drive development, leasing and property management in the year ahead.
Play and Pamper: As amenities continue to define and differentiate the newest rental communities, look for developers to be more discerning with their choices in 2018, giving careful consideration to how a building’s amenity package as a whole reflects residents’ lifestyles.
At Spoke, a new transit-oriented rental development in Chicago’s River West neighborhood, amenities were designed to create mini experiences within the property by giving residents curated spaces to engage in a variety of interests. “Our renters are highly active, so a day at Spoke might mean hosting a dinner for 20 in our family room, letting your inner rock star out on the stage in our performance lounge or battling competitors from around the world in our gaming lounge,” said Rob Bond, president of Bond Companies, co-developer of Spoke.
Located in Chicago’s white-hot River North neighborhood, SixForty North Wells offers a number of social amenities that match the vibrancy of the surrounding area. With two floors of indoor and outdoor places to play, the building sets itself apart with features like a giant wall-mounted Scrabble board, outdoor putting green and shuffleboard table. “Amenities can make or break whether a resident chooses a building,” said Sheila Byrne, executive vice president of property management at The Habitat Company, a leading U.S. multifamily developer and property manager. “Renters rank distinctive amenities as a high priority when choosing an apartment – right up there with cost and location. This building delivers on all fronts.”
And for renters seeking more zen, some buildings are turning up the heat with specialized spa treatments and facilities. At The Residences of Wilmette, a five-story rental development with 75 well-appointed residences, the building’s spa features chromotherapy technology, which uses light in the form of color to balance physical, emotional and spiritual energy. “As a new luxury rental offering near the large single-family homes along Chicago’s North Shore, this building is drawing a more established renter,” said Diana Pittro, executive vice president of RMK Management Corp., which manages the property. “For them, it’s just as important to have spaces that encourage relaxation of the mind, body and spirit as it is to have stylish community rooms where they can entertain.”
Exercising Your Options: Another way properties are looking to gain edge in 2018 is to give more weight to their fitness center. High-end gyms have been a mainstay of luxury apartment properties for several years, but some are differentiating themselves by featuring specific fitness brands with a strong following.
At The Sinclair, Fifield Realty Corp.’s new luxury rental tower in Chicago’s Gold Coast, the fitness center sports premier equipment such as a Pilates Cadillac Reformer, a Pilates Studio Reformer and a Power Plate. Also available to residents are an adjacent yoga and meditation room, as well as a separate physical therapy studio. “The Sinclair’s fitness offering extends beyond our top-of-the-line gym equipment,” said Randy Fifield, chairwoman of Fifield Realty Corp. “We also promote a wellness lifestyle, offering residents easy access to concierge wellness services from LulaFit.”
Kass Management Services is also a fan of LulaFit, partnering with the service at many of its Chicago properties. “LulaFit is a great service we can provide residents in both newly constructed and older buildings,” said Mark Durakovic, principal of Kass Management. “With LulaFit, we can turn any indoor or outdoor area into a space for health and wellness through on-site fitness classes and other programming.”
And while spinning rooms have become common, rental buildings along Chicago’s bike-friendly Milwaukee Avenue corridor, like Spoke, are shifting into high gear by featuring Peloton bikes, a premier brand of stationary bikes that offer live and on-demand spinning classes delivered through a bike-mounted screen. Riders can also choose a biking experience to do with a group of friends. “When it came to planning our fitness facilities, we knew we wanted to work with Peloton because of its huge following, and it is best in breed,” said Rob Bond, president of Bond Companies.
What you won’t see in most building gyms going forward is bulky weight equipment, noted David Scharfenberg, vice president of operations for Waterton, a national multifamily owner/operator. For example, when the firm recently renovated 75 Tresser in Stamford, Conn., and Riello in Edgewater, N.J., it elected to add StairMaster and PowerMill climbers — high-quality cardio machines more typically found in professional fitness centers — as well as open space for yoga and resistance training. Waterton has also installed a Jacobs Ladder climber and Nexersys Pro boxing machine at 75 Tresser.
Even senior living communities are flexing their muscles by providing a safer, more encouraging environment to stay fit. Pathway to Living, a Chicago-based developer, owner and operator of senior housing communities, is installing pneumatic strength equipment from HUR at some properties. Designed specifically for seniors, the machines feature a key card that, once inserted, automatically adjust the resistance to a resident’s abilities.
Home Meets Office: With access to technology critical for today’s mobile workforce, it’s no surprise high-speed internet access recently ranked as one of the top five in-unit amenities, according to a survey by the National Multifamily Housing Council and Kingsley Associates. Similarly, dependable mobile connectivity was a must-have in common areas (92 percent) – higher than both swimming pools (82 percent) and fitness centers (82 percent).
Waterton, whose portfolio includes 14,000 apartments across the U.S., sees growing demand in 2018 for living spaces that can double as individual or collaborative workspaces. At The Citizen at Shirlington Village, a 404-unit rental community in Arlington, Va., Waterton plans to renovate the clubhouse to include individual work pods as well as communal areas with spaces designed for people to meet, socialize and collaborate.
“We’re cognizant of how amenity space use has evolved, and that working from home is no longer limited to business centers,” said Lela Cirjakovic, executive vice president of operations at Waterton. “With existing rental communities, we’re redesigning and sometimes repurposing underutilized common areas so they can better accommodate work-from-home professionals and entrepreneurs.”
The development team at Draper and Kramer, Incorporated, a full-service real estate firm, is also retrofitting properties with tech features. As part of the firm’s recent redevelopment of Wheaton Center, a 758-unit community in Wheaton, Ill., a fiber optic backbone was installed to provide ultra-high-speed Wi-Fi throughout the common areas of the entire six-building community. “We still include traditional work-from-home amenities like Wi-Fi cafés and business centers, but for many renters, offerings they can’t see – such as internet service – are just as important,” noted William Van Senus, senior vice president with Draper and Kramer.
Some communities are doing away with business centers entirely in favor of more thoughtfully designed spaces like the “Living Library,” an expansive, light-filled lounge – complete with a copper-hooded fireplace, library tables and custom artwork – that serves as the amenity centerpiece at Landmark West Loop, a 300-unit rental tower in Chicago’s West Loop.
“The Living Library functions much like a co-working space, but in a setting that’s more private for residents, giving them a dedicated space to work, network and entertain,” said Mike Ellch, vice president of development for Related Midwest, the tower’s developer. “Like Landmark’s common areas, our residences offer 1 gigabit-per-second internet service, making the transition from home to office seamless.”
And at TriVista on Speer, a 322-unit apartment building under construction near Denver’s Golden Triangle neighborhood, KTGY Architecture + Planning worked with the project’s developer to program four live/work residences into the unit mix. In addition to a private street entrance with opportunities for window signage, each features an open first floor with a half bath, plus a second-level living area.
“From an architectural perspective, the storefront-style residences activate the streetscape while concealing the interior parking structure behind them,” said Terry Willis, principal of KTGY. “They also capitalize on the Golden Triangle’s status as a creative district, catering to the neighborhood’s makers and innovators, including artists and other small business owners.”
Tech-Savvy Seniors: Look for technology to play a bigger role in senior housing as well, influencing not just the daily activities offered to residents, but also the level of care provided.
“Today’s seniors are living longer and choosing residential communities where they feel they can stay the most informed and connected to their loved ones, and technology is playing a growing role in that,” said Maria Oliva, chief operating officer at Pathway to Living. “Tech is also a key selling point for adult children involved in making housing decisions for their parents.”
With tools like Realync, Pathway has the ability to facilitate live virtual property tours that can be saved and replayed – ideal for residents with remote family members who are unable to attend an in-person walkthrough.
Technology also offers peace of mind for residents and their loved ones. In addition to implementing wearable technologies that can pinpoint a resident’s location and allow them to call for assistance simply by pressing a button, Pathway has introduced web-based tools that promote resident engagement and communication between staff and family members. One feature of these mobile-friendly platforms is a shared calendar that tracks a resident’s appointments and daily routine.
In the development process for senior housing, technology considerations go far beyond typical high-speed Wi-Fi access. CA Senior Living, the senior housing investment and development division of Chicago-based CA Ventures, builds communities to include life-saving and life-enhancing technology. “In addition to first-of-its-kind, real-time tracking and easy-to-use nurse call systems, the technology available in the next generation of senior housing will combine medical and lifestyle elements,” said Matt Booma, vice president of development at CA Senior Living. “Our residents will be able to enjoy the benefits of augmented reality with activities like ‘virtual globetrotting,’ which allows them to explore exotic destinations from the comfort of home. Meanwhile, wearable tech gives our operators access to robust data – for example, activity participation and staff efficiency – that can be analyzed to further enhance the overall health and well-being of our residents.”
Art As Amenity: While art has long been incorporated into luxury residential buildings, developers are differentiating their communities by going big with big-name artists or, in some cases, seeking out emerging, often local talent whose work has not yet been widely discovered.
Randy Fifield, chairwoman of Fifield Realty Corp., carefully selected over 90 pieces of original art that adorn The Sinclair, Fifield’s new 35-story, 390-unit apartment tower in the Gold Coast. “Prospective tenants are mesmerized by the vibrant artwork we have from Ryland Arnoldi of WRAPPED L.A., Peter Tunney, Damien Hirst, Frank Stella and other significant modern artists,” said Fifield. ”Walking into the lobby and seeing an Alexander Calder lithograph says something about the quality of our building and the level of amenities and service renters can expect. It’s become a major differentiator.”
Located in Chicago’s River North neighborhood, 8 East Huron, a new rental community developed by CA Ventures, boasts its own private art collection hand-selected by the Chicago Art Source and displayed throughout common areas of the building. “The art collection at 8 East Huron is considered another lifestyle amenity, as it enhances the overall residential experience while elevating the profile of the building,” said Bob Flannery, chief operating officer of CA Ventures. “We highlight the artwork in website content and marketing materials the same way we include amenities like the pool or club room.”
Art is also being featured prominently in new student housing developments. CA Student Living, the student housing entity of CA Ventures, made sure art was front and center at RISE on Apache, a 15-story community near Arizona State University in Tempe, Ariz. The interior and exterior common spaces feature large-scale murals depicting the Sun Devil mascot in a luchador setting, colorful desert-scape scenery in step with the surrounding vistas and street-art-themed shipping container cabanas on the rooftop pool deck. “It’s about more than decorating the walls when we design our communities,” said JJ Smith, president of CA Student Living. “We are supporting local artists by showcasing their work in a setting designed to inspire social and academic growth.”
Beam Me Up To My New Home: Virtual reality (VR) was a game-changer in several industries in 2017, including multifamily real estate. But 2018 should be its breakout year as more adopters of the technology discover its benefits in boosting pre-leasing and pre-construction sales.
According to Aaron Galvin, CEO and co-founder of Luxury Living Chicago, virtual tours can help seal the deal when leasing under-construction projects. “It’s an innovative way for prospects to visualize and experience something that isn’t quite finished,” said Galvin.
Luxury Living Chicago successfully used virtual reality to pre-lease units at 8 East Huron, a high-end boutique rental property in the heart of downtown Chicago. “Thanks to VR, we leased over a dozen units we likely would not have captured during that time, as the building wasn’t open yet,” said Galvin. “People felt comfortable moving forward with a lease because of their VR experience.”
VR is also proliferating at the high end of the new-construction condominium market. Belgravia Group developed its VR 360 Model Home technology to give buyers a true-to-life look at its Renelle on the River residences in downtown Chicago. “The VR experience at Renelle is like nothing else currently available in the city,” said Liz Brooks, vice president of sales and marketing at Belgravia. “Initially drawn by the building’s prime location on the Chicago River, buyers are enamored by this technology and are excited to keep coming back to our sales gallery so they can bring their future home to life by ‘walking’ from room to room, switching out countertops and cabinets, and even seeing how the light in a room changes from day to night.”
Storage Wars: A perennial challenge of multifamily living, on-site and off-site storage options will become a more competitive differentiator among developers and property managers in the year ahead, especially for projects targeting empty nesters who have a lifetime of items to store.
For buyers looking to downsize from the upkeep of a single-family home without sacrificing square footage, Foxford Station in downtown Western Springs, Ill., offers condominiums with large kitchen pantries, walk-in closets in all master bedrooms as well as linen closets in each bathroom, and oversized laundry rooms with dedicated storage closets. “We also put storage rooms with spacious lockers on each floor so residents can easily retrieve seasonal items and other belongings they don’t need on a regular basis,” said Peter Brennan, president of Foxford Communities, the developer of Foxford Station. “The amount of storage in these condominiums makes it an easy transition for downsizers.”
The classic closet conundrum also is addressed at The Residences of Wilmette, where all closets are outfitted with a customizable Elfa storage system. Residents have the option to personalize their enhanced shelving systems with additional Elfa products at a discount through the building’s property manager. “Closets are by no means ‘one-size-fits-all’ and residents at high-end communities expect the ability to customize storage spaces to suit their needs,” said Diana Pittro of RMK Management. “Our relationship with the Container Store allows residents to work with a free design consultant to find the right mix of shelving and storage accessories.”
Even with ample walk-in closets, storing larger seasonal items like skis, bikes and golf clubs can be a challenge in some buildings. As a solution, Kass Management Services has partnered with Blue Crates, an on-demand storage service that delivers a resident’s belongings to their front door at the time and day of their choosing.
“With Blue Crates, residents can easily store and retrieve items with just a few swipes on their smartphone,” said Mark Durakovic, principal of Kass Management. “Not only is it a fast way to free up valuable closet space, but it’s also affordable, with most plans less than $10 a month.”
Affordable Housing Developers Get Creative With Service: With the uncertainty surrounding the proposed tax bill, some of the mechanisms the industry uses to finance affordable housing could change in 2018. But one thing that won’t change is how developers and managers of these communities are finding creative ways to address residents’ social, financial and medical needs as the national supply of affordable residences remains critically low.
Chicago-based The Habitat Company, which manages 10,000 affordable housing units, continues to increase the offerings at its affordable properties through the firm’s newly launched nonprofit entity, Generations Housing Initiative (GHI). Depending on the community, GHI services can range from health and wellness programs to coordinated access to supportive services for individuals and families. “Habitat began as an affordable housing developer, so we understand that today, more than ever, our residents need this type of assistance,” said Matt Fiascone, president of The Habitat Company. “We believe in providing housing that gives residents the resources they need, right where they live.”
In 2018, Chicago-based Evergreen Real Estate Group, a real estate company that develops, acquires and manages both affordable and market-rate rental communities, will continue its focus on using a “whole person” approach – or one that considers the unique circumstances of each individual – as one way to improve the residential experience. Many of the firm’s executives have backgrounds in social services and nonprofits, giving them a deep understanding of the various needs associated with economically disadvantaged renters.
“In some cases, we work with a resident council to identify and implement programs offered by partner organizations within the surrounding community,” said Steve Rappin, president of Evergreen Real Estate Group. “In addition to providing basic services, this collaboration fosters a sense of community and ownership among residents. As a result, they tend to take better care of both their unit and common areas, reducing costs associated with maintenance and turnover.”