We’re in the midst of a multifamily development boom. If you’ve been to any major city over the past few years, you see ‘stumpy’ midrise developments everywhere. The forgettable stick-frame buildings all look similar. They are relatively cheap to construct, go up quickly, and cater to a wave of demand from Millennials and Gen Z’ers delaying marriage, having kids, and buying or renting a home in the suburb.
With the cost of construction and land at elevated levels, development yields are compressed, developers have little flexibility to physically differentiate their property from the other new apartments in town. New communities look alike, have the same flashy amenity set, and take a similar approach to marketing, branding, and the resident experience.
In today’s environment, how can developers outperform the competition? The experience.
Chip Conley, one of the first boutique hoteliers and founder of Joie de’Vivre Hotels, is famous for striving to meet “customers unrecognized needs”. His framework for running his hotels was based on his version of Maslow’s Hierarchy of Needs; “meeting expectations” was at the bottom and was the bare minimum. One level up is “meets desires”, things customers want, but wouldn’t expect. This is the surprise and delight factor. The top of the pyramid was “meeting the unrecognized need”. This is the hardest and most interesting. Chip offered four ways to accomplish this;
- Help customers meet their highest goals.
- Give your customers a way to truly express themselves.
- Make your customers feel like they’re part of a bigger cause.
- Offer your customers something of real value they hadn’t even imagined.
This isn’t a mindset you see often in the multifamily space but seems to be the backbone of the modern hospitality space.
Ian Schrager, another disrupter in the hospitality space, recently launched a new brand of hotels, Public Hotels, redefining “affordable luxury” within the 3-star select-service space. His approach toward Public Hotels is a great example of how multifamily developers should approach their new projects.
His hotels are successful because of the magic he can create within the public spaces that make you feel part of the community. Like the lobby of the ACE Hotel in New York, which was an early model of today’s co-working spaces.
He’s able to create a sophisticated space, yet offer rooms at an attractive rate due to several innovations which cut cost, without taking away from the guest experience:
- There is no front desk, guests check in on an iPad in the lobby.
- Room service involves messaging the hotel with your order and picking up your food from a shelf located near the lobby-level elevator bank (just like the UberEats and Sweetgreen models).
- Guests who need an extra towel or amenity simply message the hotel to find the location of a designated “amenity room” where they can pick up what they need themselves or ask a staff member to deliver it to their room.
- Guests aren’t nicked-and-dimed to death; WiFi is free, there’s no delivery fee, coffee is free etc.
- Instead of asking guests to download an app to communicate with the hotel, they developed a proprietary chatbot messaging platform through which guests can text using iMessage, SMS, WhatsApp, and Facebook.
The goal is to automate the execution of the hotel business but bring back the amenities through the service and the entertainment factor.
Multifamily operators should think in a similar fashion:
- Can you automate things such as leasing through chatbots and service requests through software?
- Do you need to charge all the fees that have become common? Pet rent, trash fees, utility set-up fees etc.
The goal is to improve the resident experience by eliminating things that take up the staff’s time and create a negative touchpoint with residents.
Schrager also recognizes the threat of Airbnb and focuses on providing something they cannot, like a huge communal space. At the same time, he focuses on doing something Airbnb is good at, coming up with a hotel that manifests the city that it’s in. The Public has a multi-purpose space called ‘Public Arts’ where you can attend screenings, art exhibitions, performances, or dance the nights away. Multifamily properties don’t need separate screening rooms, art rooms, and co-working spaces. Instead, developers can create one great communal space that is all the above; co-working, concert space, art exhibit, and event space.
Schrager also describes the bars and eateries at his new concept a “microcosm of the best that New York has to offer”. Similarly, developers need to cultivate a community that manifests the city it’s located within. This can be done by designing a space that conveys a neighborhood, utilizing local artists and furniture makers, and creating amenity sets that match the interests and desires of its residents.
Ultimately, Public’s blend of technology and social spaces inspired by co-working and co-living models make it affordable and attractive, but it’s done in a way where it still feels sophisticated.
All these concepts being employed by Schrager in his new hotel brand can be adapted to the multifamily space to create a sophisticated space, without the fluff, that embodies the neighborhood it’s located in.
A buddy of mine, Lyon Porter, who’s created unique hospitality concepts such as the Urban Cowboy in Brooklyn and Nashville and the recently opened the Dive Motel on Nashville, aims to create what he calls “Instant Classics”. Amazing spaces that stand the test of time.