Community planning for efficiencies is one way to establish resident satisfaction and retention.
Given the rising-rents environment, prospective residents are putting more emphasis than ever on price.
Renting apartments continues to be highly competitive, given the short supply in many markets. There are several strategies operators use to win the day, such as boasting superior amenities as they market themselves along the customer journey.
At Grubb Properties, its greatest focus today is on pricing. It is offering lower rents to the residents who need it most—those needing workforce housing in reasonable proximity to jobs in key markets.
To provide these affordable rents, Grubb Properties’ development team has found innovative building techniques that are helping it keep rents in check while not sacrificing quality.
“When prospective renters are comparing apartments to move into, they don’t pay much attention to square footage, but they pay a lot of attention to price,” said Todd Williams, Chief Investment Officer with Charlotte, N.C.-based Grubb Properties.
“Because our smaller units are designed so efficiently, space-wise, they can still include the walk-in closets and 44- to 48-inch vanities and general storage that renters expect. And, they have Class A level kitchens and stackable washer/dryers.
“Our rents trend about $100 to $600 less than the competition. It helps our residents to qualify and to save on their family budgets.”
Grubb Properties apartment homes under their Link Apartments brand range from 364-square-foot studios to 1,150-square-foot two-bedrooms. Its design approach eliminates any unused hall space or odd corners, and they build only six different floor plans to further improve efficiency.
“You can look at it almost like LEGO blocks that fit together perfectly,” Williams says.
“This creates for us many cost- and time-saving steps: It takes less time to construct the building because the layout is consistent and familiar to the builders. By saving time, we save on labor costs. Because we can order materials consistently and in bulk volume, our costs are lower. We use the same fixtures for all of our homes, so we again can save with volume pricing.”
For its and its investors’ bottom lines, the units are smaller than its peers and generate higher dollars in rent per square foot.
Providing ‘Essential’ Housing
During the pandemic, “everyone was rent-sensitive because of all of the unknowns surrounding the economy and jobs,” Williams said. Grubb Properties appeals to those earning 60% to 140% of area median income (AMI).
“Because our communities were priced much more economically than the competition, and because so few renters at the time were looking to lease at luxury apartment communities in April and May 2020, our lease-ups were accelerated and they outperformed our pro forma. Most competing communities were 75 percent occupied, and we were at 97 percent. In 2021, we’ve been at 97 to 98 percent occupancy.
“We look at it as we’re providing ‘essential housing,’ not workforce housing,” Williams said. “Our apartments are just right for young families wanting housing they can afford and who want to live in urban areas but can’t because of the affordability.
“Our entire focus is on the rents. We aren’t ones looking to chase the amenity wars, we’re not providing that or ‘super pools’ etc. For our customers, it’s more about price and to give them just what they need – like a great fitness room so they don’t have to spend on gym memberships.”
A New Approach to Parking
Parking is one area where Grubb Properties has thrived economically, developing shared parking lots for its multifamily and office structures, reaping the benefits of synergies in operating expense savings, as the two uses share the parking cost and a revenue source.
It’s even building a parking lot-free community in Charlotte. The 104-unit CYKEL Apartments is less than a mile from the central business district, and Williams said Grubb Properties has the confidence that it will succeed.
“This is going up in our ‘backyard’—an area where we know the demographic well.”
Residents who sign leases must guarantee that they don’t or won’t own a car. Grubb Properties instead is including a lot of bicycle accommodations, and it’s located near a greenway that can connect residents to amenities and other parts of the city without having to ride on city streets. For these renters, price is more important than anything, including owning a car, Williams said.
“The cost of providing parking can be the enemy of developers wanting to build for affordability,” Williams said. “When we include parking, we tend to build office buildings and residential buildings next to each other so they can share the lot to save on parking lot construction costs.”
Grubb Properties provides for an interesting—and uniquely efficient—number of spaces that will accommodate workers during the day and residents at night, figuring, those residents who have cars, tend to need them during the day.
Its strategy begins with buying an office building with a surface parking lot, which it then retitles to be a multifamily site. This results in a significant discount to the price of the land to build that housing – as much as $30,000 to $60,000 per unit in many of their markets.
“This, in turn, is one more thing that helps us to reduce the amount of rent we need to charge,” Williams says.
Its Link Apartments Montford Park community in Charlotte, for example, has 288 units. Typically, it would need approximately 350 parking spaces to accommodate residents. By having it next to an office structure, so it can be shared, Grubb Properties built 450 spaces, which is enough to compensate for day and night parking needs for all.
Grubb Properties has a dozen of these “dual-parking deals” with its apartments and offices.
“With office demand beginning to come back after the pandemic, focusing on efficiency is so key,” Williams said. “Our efforts help us to achieve our company’s ESG goals.”
For example, Grubb Properties acquired a lot from a property that was built in the 1970s. Back then, storm drains were not required for the parking lot.
“After heavy rains, you could just see the oil residue left on the pavement,” Williams said. “We added a filtered drainage system that not only allows the water to drain to the nearby creek, but turns it into potable-standard water, which is so good for the environment. That helps to take care of our ‘E’ in ESG—for environment.”
Williams added that because Grubb Properties housing is primarily workforce housing, that helps it with the “S” in ESG – for social. And because its corporate operations and management policies are held to the highest standards, that fills the “G” for governance.
Paul Bergeron is a freelance contributor to units Magazine.