Apartment development is thriving in our hometown of Denver. More than 52,000 units are in the works or being planned throughout the metro area according to a recent article from the Denver Post. Since the process for planning, building, and renting out apartments is fairly long, developers face issues when recessions hit mid-construction, as they can’t simply stop building. While there’s no way of telling exactly when the next recession will occur, there are things developers of multifamily units can do to take less of hit when they happen.
It’s difficult to predict the true impact an economic downturn will have on a city, its residents, and its businesses. However, developing in a city that currently has a strong job market is the safest bet. Selecting cities that are up-and-coming or currently struggling proves to be a much bigger risk if a downturn were to occur. For long term prosperity, look for cities that are experiencing an influx in new residents and are currently viewed as a desirable place to live. According to the article, “recession or no recession, Denver’s popularity will remain intact. A downturn is a bump in the road, not the end of the ride.”
When the housing market is hot and there’s a lack of available units, it’s easier to rent out places that might not be in the best part of town or are in difficult location to get to. However, if when the economy is in bad shape and rents decrease, it becomes much more difficult to rent out these units. Walkability, safety, and nearby attractions are always good things to look for when scouting potential locations for a new complex. The article encourages companies to “exercise enough caution on the front end, and [they] should have confidence that three, six, or 10 years out there will be demand for high-quality residential property in a good location.”
Similar to location, developing complexes with the right amenities will always drive interest among potential tenants, recession or not. Select amenities that make tenants’ lives easier and improve their quality of life. If possible, try to find amenities that you can use in your marketing efforts to differentiate your complex from others in the area. You don’t want to compete with complexes when they start offering deals to get tenants during a downturn if you don’t have similar or better amenities to boast.
When complexes are having a difficult time filling their units, it’s common to see offers for the first month rent-free or half off. While this can be a great tactic to get residents in the door, look to differentiate yourself by offering something that would help tenants furnish their unit, making it more of their home. Consider offering a nice flat screen TV or even a $1,000 gift card to a furniture store. These incentives will likely cost less than giving away an entire month free and can appeal to residents who already know what they’ll need to purchase once they move into their new place.
Looking for additional ways to improve resident experience, download our free six-step guide!