Introduction

Installing amenities and recreational facilities has become a major selling point for multifamily properties looking to attract and retain residents in a competitive market. But how exactly does investing in amenities impact the bottom line for owners? Research shows that the return on investment (ROI) of thoughtful amenity planning can be substantial in the form of higher rents, occupancy rates, and overall asset value.

Demand and Rents

Today’s renters, particularly millennials and families, expect more than just the basics from their home. When surveyed, amenities like fitness centers, swimming pools, clubhouses, and sports facilities consistently rank as highly desirable features tenants are willing to pay more for.

Properties that invest in the right amenities can leverage this demand to:

• Increase rents: Units with desirable amenities command on average 5-10% higher rents over comparable non-amenitized units.
• Grow ancillary revenue: Some amenities like fitness classes, room rentals, and pet services create income beyond just rent.
• Retain residents longer: Quality amenities encourage tenant renewal and referrals, reducing turnover costs.
• Fill vacancies faster: Curb appeal and amenities help attract prospective tenants to tour and lease quickly.

Occupancy Rates

Properties with exceptional recreational facilities and amenities tend to enjoy higher occupancy rates for several reasons. The desirability draws more prospective tenants to apply. Current residents are also less likely to move elsewhere when their needs are being met onsite.

For example, a survey by RentCafe found that properties with fitness centers had average occupancy rates of 95% compared to just 90% for those without. Similarly, multi-family buildings with swimming pools averaged 94% occupancy versus 91% for those lacking pools.

Operating Efficiencies

The technology underlying many modern amenities also allows landlords to realize savings on operating and maintenance costs:

• Smart thermostats and lighting reduce HVAC and electricity expenses in common areas.
• Electronic access gates and doors lower the cost of staffing entrances.
• Remote smart home controls automate leak and outage detection, allowing for rapid response and less property damage.
• Online portals reduce paper waste and mailings for payments and announcements.

As amenities become “smarter”, they generate data to optimize performance and expenses.

Enhanced Property Value

Ultimately, amenities significantly enhance a property’s overall asset value and profitability in the event of a sale. Cap rates directly account for a complex’s net operating income. Properties able to achieve higher rents, occupancy rates, and efficiencies due to premium amenities will garner higher valuations and selling prices.

In fact, a National Apartment Association survey found that:

• Communities with fitness centers sold at rates up to 11% higher per unit compared to those without.
• Properties with swimming pools and outdoor facilities sold at 6-8% higher rates on average.

Key Considerations

Of course, just adding any amenities does not guarantee an ROI. Owners and managers should:

• Conduct market research to identify which specific amenities renters in the area highly value. Fit those to the target tenant demographic.
• Focus on amenities that generate tangible efficiencies and revenue rather than just “nice to haves”. Prioritize maintenance and costs.
• Make amenities amenity-management tech enabled to maximize convenience and cost savings.

With strategic planning, the right amenities can provide excellent returns on investment for owners in both the short and long-term life of the property.

Conclusion

Amenities have become a must-have rather than a nice-to-have for today’s multifamily buildings. Investing in facilities like fitness centers, pools, and recreational spaces brings financial upside through higher rents, occupancy, operational efficiency, and asset value. Owners who fail to prioritize amenities risk falling behind the competition when it comes to attracting renters and maximizing NOI. The data shows that thoughtful amenity planning delivers a strong ROI overall.