Rod Khleif Real Estate Investor, Mentor, Coach, Host, Lifetime Cash Flow Through Real Estate Podcast.
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It is not an understatement to say that the coronavirus pandemic changed the normal rhythms of life for almost all of us in one way or another. This is especially true for the way that we work. Given that the primary tool to combat the pandemic was social distancing, many of our offices shut down for extended periods of time and we were forced to work from home.
At first, it may have been an inconvenience, but a funny thing happened. It turns out that many of us liked working from home, and the data supports this. A recent survey from the job site FlexJobs revealed some compelling statistics. Among them:
• 51% of respondents said that they are more productive when working from home.
• 73% of respondents said they had a better work-life balance, primarily due to the lack of a commute.
• 65% of workers reported that they want a full-time remote job once the pandemic ends, and another 31% said they would prefer some sort of hybrid office/work-from-home arrangement.
As multifamily investors and mentors, our minds naturally turn to how this preference for remote work will impact renter amenity preferences going forward. While there is still much uncertainty, there are four trends that investors should be aware of and planning for.
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Trend 1: Enhanced Connectivity
The backbone of remote work is a stable, reliable internet connection, and this is a base-level expectation for modern renters. However, communities looking to cater to the remote worker can set themselves apart with state-of-the-art connectivity options for their community. This could include things like:
• High-speed Wi-Fi for the entire community, allowing residents to stay connected to the same network, regardless of where they are on the property.
• Access to video conferencing systems in common areas.
• Collaborative working spaces with advanced audio/visual presentation capabilities.
• Seamless switching between devices on the Wi-Fi network.
In short, residents who are working from home full- or part-time will demand that their property have all of the audio, visual and internet connectivity amenities necessary to support them. Investors and property managers who recognize this trend stand to benefit through rental premiums, increased tenant retention and higher occupancy rates.
Trend 2: Rethinking Unit And Common Area Layouts
This particular trend is most applicable to developers currently designing projects or investors planning major renovations to an existing property. In a work-from-home scenario, residents want to separate their living space from their workspace.
In response to this trend, Propmodo reports that:
• Post Brothers, a Philadelphia-based multifamily developer, decided to replace entertainment amenities with more coworking space in common areas.
• Greystar, a large multifamily landlord, is adapting to work-from-home trends by updating unit layouts to include work nooks, pods and booths. In addition, it is redesigning community workspaces to include fewer communal areas and more private spaces.
• Other experts are predicting the return of the one-bedroom-plus-den unit layout, where the den is used as a home office. This unit type had fallen out of favor but may see a resurgence for tenants who want a separate work area without the cost of a full second bedroom.
• Finally, in high-density urban areas like Los Angeles, Miami and New York, property owners are placing an increasing premium on flexible or mixed-use amenity spaces. Because there is a limited number of square feet, areas that serve multiple purposes can provide additional benefit to the apartment communities in which they exist.
Again, the bottom line is that the communities that are in line with these trends are the ones that stand to benefit from rental premiums, higher occupancy and better tenant retention.
Trend 3: Increased Focus On Wellness
This trend is indirectly related to working from home, but if residents are spending more time in the community, they will also want more access to wellness amenities like a properly equipped fitness center, areas for yoga and stretching, outdoor amenities like walking/running paths and grilling areas.
For bigger rental properties, there may also be a benefit of building spaces that are dedicated to handling increased food deliveries. These could be short-term warmers for meal delivery, or larger walk-in refrigeration spaces to hold grocery deliveries until a resident returns home.
Trend 4: Building Materials
While building materials may not be considered an amenity, work-from-home trends may cause them to become so. Specifically, residents working from home have a strong desire for well-lit spaces that are quiet enough to allow them to concentrate on necessary tasks.
To accommodate these wishes, developers are rethinking window size and placement as well as the amount of sound insulation in each unit. Proper use of these materials will help keep remote workers focused and not bothered by pesky background noise when taking their Zoom calls.
What Should Multifamily Investors Do About These Trends?
To be sure, it is unclear how much staying power the work from home trend has. While workers, especially millennials, seem to love it, the feeling is not necessarily mutual for companies. So, it may be tempting to overcorrect for these trends with a downside risk that they fizzle out.
For now, we advocate caution. The most likely scenario is that a hybrid office/remote arrangement will become the new normal. So, it may not be necessary to completely reconfigure apartment buildings and common area layouts, but we do think it makes sense to take a pragmatic view toward low-cost, high-return perks that will make it easier and more comfortable for those residents who work from home.
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