Multifamily real estate is evolving to become more of a consumer product. By that, I mean that real estate is becoming more flexible, branded, and focused on the consumer. At the same time, ownership of apartments is rapidly shifting from individuals to regional and national firms.
As the industry becomes more institutional, we are seeing firms roll up their communities under brands.
I use that term ‘brand’ loosely. A brand, to use Seth Godin’s definition, ‘is a set of expectations, memories, stories, and relationships that taken together, account for a consumer’s decision to choose one product over another’.
In multifamily real estate, developers and operators are building multiple projects across geographies under the same name. There’s countless examples; AVA and eaves by Avalon, Novel by Crescent Communities, X Living and Society Living by PMG, Link Apartments by Grubb Properties, Modera and Alister by Mill Creek, Accent and Alta by Westplan, AVE Living and aka by Korman Communities, and Solis by Terwilliger Pappas to name a few.
On a larger scale, Mid-American Apartment Communities (MAA) has spent the past 5 years rebranding all its communities under the MAA name. The public REIT is making a bet that brand recognition will help establish trust with residents. Cortland is another big owner/developer which has taken a thoughtful approach to branding. Mike Gomes, their chief experience officer, was recently quoted in a Costar article about branding.
“When we did some surveys of renters in the general population, not people who rent from Cortland but apartment renters, and we asked them to name apartment management brands, the No. 1 answer was, ‘I don’t know,’” Gomes said in an interview. “So that was interesting. I can’t think of another business-to-consumer industry that doesn’t have any brands that the consumer knows.”
This doesn’t surprise me. The challenge with the approach MAA and Cortland are taking is that they’re branding all different types of communities under one umbrella. A class B suburban property and an urban class A new development target a different renter with different priorities and expectations. There’s a reason Marriott, by comparison, has 30 separate brands. Each one has a niche audience they cater and market toward.
Based on Seth’s definition above, it’s hard to call any of these apartment communities ‘brands’. If you work outside of the multifamily space, you’ve most likely never heard of these companies and consumers aren’t making living decisions based on their relationship with the company and set of expectations for living in such a community.
It’s difficult for developers/operators to establish brands for a few reasons; most don’t have scale, most residents transition from an apartment to a house, and apartments aren’t cool so they don’t benefit from the best branding tool we have today, social media. Hotels and restaurants are a different story. Cool people want their friends to know they are at the 1 Hotel South Beach and the ACE Hotel or are eating at Carbone. Despite having just a few locations, these are nationally known brands that come with a set of expectations from consumers. Contrast that with MAA, the nation’s largest apartment owner, known by almost no one outside the real estate community and their residents.
Brands emerging within the multifamily real estate space today are the space aggregators such as Airbnb and Landing or modern 3rd party management companies such as Common. These companies have the advantage of scale and brand marketing, but the disadvantage of not being able to deliver a consistent and differentiated experience as they don’t control the real estate.
The way brands establish themselves within multifamily real estate is by providing a unique and consistent product offering and creating a story worth sharing. For example, Kenect, which has locations in Nashville, Phoenix, Chicago, and Cleveland offers membership-based co-working areas, fully-furnished units, and the ability to hotel your unit. Kenect is a unique product offering that appeals to the creative class which has a flexible work schedule. If you’re part of that community, Kenect is the product for you.
So what is my point with all this rambling?
- There are no multifamily brands today and operators/developers will struggle to establish brands in the consumer sense.
- Brands matter and the way they’re established is by providing a consistent, yet differentiated product/experience and a story worth sharing.
- The owners/developers who establish true brands will create a distinct competitive advantage leading to outperformance.
What is your view of multifamily brands today?