Apartment-hunting New Yorkers have always placed a great emphasis on amenities. Whether the preference is for interior amenities, such as in-unit washer/dryers and central air conditioning, or such exterior amenities as furnished roof decks, pools and refrigerated storage, the fact is more perks yield higher rents. To determine which extras offer the most bang for the buck, i.e., value to our landlords, I use the “Frisch Rule” to determine rent rates by calculating how much value specific amenities will actually bring to our leasing efforts.
For basic interior amenities, such as an in-unit washer/dryer or extra closets, I usually calculate an additional 5 to 10 percent. Private outdoor space, such as a terrace or balcony, will add at least 10 percent to the market base. The luxury and convenience of a half-bath typically increases the value of the apartment by 5 percent. But for an additional full bath, the rent is a minimum of 10 percent higher.
Building-wide service amenities such as doormen, elevator operators, concierges and live-in supers, are especially important to more mature tenants. These services generally account for a rent that is perhaps 20 percent higher than in comparable buildings without them. Of course, the location of a building factors in greatly, too.
More than ever before in my experience, demographics are significantly factoring into perceived value. The doormen and live-in supers for which baby boomers will pay a premium, seem to matter less to younger tenants, such as millennials and Gen-Z’s. Those groups seem to be more concerned with interior extras and communal space. The addition of an ice-making unit will ratchet up the value even more.
But despite all the modern conveniences, perks and preferences, the biggest determining factor for prospective tenants still remains the space, in terms of size and layout. This is especially true with younger people, who in New York City, often share their apartments with multiple roommates. For millennial and Gen-Z renters, New York City is a safe place. So for people who didn’t live here in the 1980s or early 1990s when crime was at its peak, physical doormen are not regarded as necessary for security or even convenience. With the advent of virtual doorman systems, such services as package delivery and pick-up or guest announcements are being implemented efficiently, albeit remotely. The benefits to the landlords are substantial, too, especially in terms of staffing and liability.
It may be a “virtual” win-win for younger tenants, landlords and their leasing agents, but for most mature tenants, it’s not a perceived amenity. They will pay more for a physical presence at the door and live with a less-than-perfect layout. For their younger counterparts, a larger, more livable layout, along with a communal space, are the preference.
Overall, the amenities that bring in the most value to a building are commensurate with the location and age demographics of the tenant base. As leasing representatives for landlords, it is incumbent upon us to advise our clients on ways to garner optimal rents with reliable tenants. In smaller, mixed-use walk-up buildings, we recommend renovations that include appliances that offer convenience, such as the aforementioned dishwashers and washer/dryers. In buildings with 10 or more units, we point out that a furnished roof deck will considerably increase the rental value.
In larger multifamily buildings, the rent rolls are commensurate with the quality of the service amenities and the condition of the apartments, in terms of space and conveniences. Many people will pay a premium for additional storage units in an unused portion of a basement or a fitness area. A television in a modernized tenant laundry room will also increase the value of the apartment.
There are many opportunities to upgrade building amenities, hence rent rolls, without major overhauls. A well-painted apartment with good floors, updated appliances and a modicum of storage makes a difference in terms of how much rent may be charged. In today’s world, the condition of the apartments and common areas overwhelmingly override the importance of doormen and concierge, which are extremely costly for the landlord anyway. With the addition of communal amenities, the bar continues to rise, as do the rents in a commensurate fashion.
Throughout New York City, the majority of the tenants we work with are choosing apartments based on space and interior amenities, rather than an abundance of building-wide services. In my work representing building owners, if there is a choice between updating the apartments or the building-wide amenities, I recommend interiors first!
Adam Frisch, Managing Principal
Sierra Residential
875 Avenue of the Americas, Suite 1808
New York, NY 10001
212-244-2103
afrisch@sierranyc.com
http://www.sierraresidential.com
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