Recently, a 100-unit rental building in Vancouver was constructed and integrated with an adjacent community centre, which has been made available for the enjoyment of building residents as well as people in the neighbourhood. The community centre offers amenities that are attractive to residents. It also creates a strong sense of community by providing a place for people to meet and interact.
This is a prime example of how Colliers International works with developers, property owners and residents to transform a building of individuals into a community.
“It is a challenge to get building residents to interact with each other, let alone with the broader community,” says Susan Williams, vice-president and managing director of real estate management services at Colliers Canada. “We leverage the community centre to provide a forum for tenant interaction and to serve as a foundation to build a spirit of community.”
Examining and understanding trends
The focus on building amenities is part of a growing trend in new construction. In the past, developers scaled back on the number and type of amenities they provided in new buildings. Their driving goal (spurred by economics) was to reduce costs and make units more affordable for renters to ensure maximum returns. This trend is now reversing as developers of both condominium and apartment buildings place greater focus on amenities. They are also spending significant time and effort during the planning process to choose the right amenities and differentiate their projects from the competition. The end result is strong occupancy rates and better returns.
The trend toward community-based developments is spreading across Canada. A developer in Vancouver is currently engaged in a multi-year project that involves the construction of more than 4,000 condominium rental units and 600,000 square feet of retail/office space. The planning process began approximately two years ago when Colliers was brought on board to assist in creating a vision for the community. This involved researching the local community, particularly its demographics, and identifying which amenities should be offered to appeal to the project’s target market.
“We discussed a number of issues with the client, including services, staffing, (its) vision and what would be required to support this vision,” says Williams. “We helped to develop a plan that included budgets and amenities; (however,) the discussion first started by attempting to answer the question, ‘What community are you trying to build?’ (This) set the context for the entire development.”
Targeting a desired market goes beyond selecting specific amenities. It involves determining how a building will operate as part of the surrounding community. For example, utility management is now a key focus in both new and existing buildings. Building owners are developing a greater understanding of the environmental impact of their properties and the financial benefits associated with investing in energy management. Tenants are not only becoming increasingly aware of the environmental impact of their properties but are becoming powerful advocates for positive change in how buildings are managed.
“It appears to be more of a generational issue as younger tenants are more interested in the topic of energy consumption in the context of sustainability,” says Peter Papagiannis, senior vice-president of national operations and real estate management services at Colliers Canada. “According to our rental team, potential tenants seek an understanding of the building with respect to utilities and environmental issues, and then (they) incorporate this knowledge into their selection process. There is the same level of concern for what the building owner is doing about reducing energy usage as there is for what they would be paying for rent.”
This trend also includes a greater demand for LEED (Leadership in Energy and Environmental Design). Many condominiums are being built with features that address issues related to sustainable site development, water efficiency, energy efficiency, materials selection and indoor environmental quality. This includes implementing energy-efficient heating and cooling systems, using low VOC paints and finishes, and installing low-E argon-filled windows. LEED certification has become a key selling point when marketing a building.
Condo owners and renters are also looking for innovative energy-saving ideas such as rainwater collection facilities and motion sensor lighting in stairwells. Older buildings are being retrofitted with individual suite controls that enable residents to monitor and limit energy usage, programmable thermostats and energy-efficient appliances. Unit owners and renters actively engage property managers to discuss environmentally-friendly and energy-efficient upgrades.
Impact of demographics on amenities
Amenities include a wide range of services, from fitness centres, laundry rooms and swimming pools to building security, a 24-hour concierge and access to a transit shuttle. The importance an individual places on a given amenity can vary considerably. How an individual evaluates a particular amenity is often determined by their demographic makeup.
“Simply put, demographics affect a building’s amenities,” says Williams. “In a Lower Mainland development, understanding the residents’ lifestyles revealed the opportunity to arrange a regular shuttle service to a large shopping centre in the area. With potential of possible subsidization by shopping centres, this provides a very low-cost amenity that makes the buildings more appealing to the people who live there, while also benefitting the shopping centres by bringing shoppers directly to them.”
To understand individual preference for amenities, it is important to analyze building and neighbourhood demographics. For example, renters have different priorities than condo owners. Age is also a factor, as people in their twenties and thirties have different amenity requirements than people in their fifties and sixties. Families with children want amenities that might not be important to young professionals or empty nesters. Residents who live in luxury condominiums have different expectations of their buildings than those who do not. But what tends to unite these different groups is they all have basic expectations for the amenities in their buildings.
“Traditional amenities are now considered table stakes,” says Papagiannis. “Everyone expects their building to operate in a sustainable manner. They expect the building to be clean, secure and environmentally responsible. It’s the extras that propel a building to be different and generate the real value that is recognized by occupants and owners.”
Property managers are at the forefront of what is going on in their buildings. Their job involves understanding their buildings’ demographics and what amenities would best serve their residents. Conducting informal surveys is a good way to determine what residents want, and which amenities to add or repurpose to meet those demands.
Property managers that are in tune with their residents look for ways to make their lives more comfortable, with amenities that are conveniently located and at their disposal. This coincides with the lifestyle that most tenants enjoy, given that the demographic consists of people primarily in their twenties and thirties. The overall demographic of any given area or building makes a difference because lifestyles of various groups differ.
“Amenities help achieve the live-work balance people are looking for,” says Colliers property manager, Jennifer Gallagher. “They also foster a sense of community by bringing neighbours together in a leisurely environment. Furthermore, happy tenants stay longer, which essentially builds stronger communities and is an obvious advantage to tenant retention. In this market, it is a key element to stabilizing vacancy rates.”
A closer look at demographics and amenities
One demographic trend is that baby boomers are purchasing condominiums in increasing numbers. Developers and property managers cannot (and should not) ignore the 55-plus age group when selecting their condominium’s amenities. This demographic is very large and its members are buying condominium units in greater numbers as they downsize and seek more value for their money. They have different wants and needs than their younger counterparts, and they possess the purchasing power to get what they want.
Space is a key amenity that this demographic group commonly seeks out since, in a condominium, they have less living space than before. This is the trade-off – the 55-plus age group exchanges personal living space for less maintenance and lower living costs. Space-based amenities include rooms with specific uses such as craft or sewing rooms, which allow owners to enjoy their hobbies without using space in their homes to do so. Mature condo owners also want specific areas for socializing; places they can engage in wine tasting, catered dining, group-based games and other events that bring people together.
“These types of amenities bring a sense of community within a building because they allow neighbours to cross paths more often in a leisurely environment,” says Gallagher. “I find any amenity is attractive to (existing) and potential tenants because it is an added benefit that is inclusive in the cost of a suite.”
Owners of luxury condominium units tend to have different expectations and requirements of their buildings, and often demand higher end amenities. They tend to have more leisure time and, therefore, require lavish amenities because they have more time to use them. A typical luxury condominium could provide access to spas, fully equipped exercise centres, libraries, 24-hour concierge service and shared building use of luxury vehicles. Property managers of higher end buildings must appreciate the wide range of amenity preferences to attract and maintain residents.
As a demographic group, condominium owners have different priorities and interests than renters, and a different mindset than owners who rent out their units. It comes down to the fact that the condo owner’s investment (for example, the unit) is also their home. The emotional attachment of being a homeowner tends to overshadow the financial issues related to managing their investment. This personal interest affects what amenities they want and are willing to pay for, and drives the developer’s perception of what amenities must be in their buildings to attract the best buyers.
“In a condominium, the property manager is often governed by the wishes of the individual owners, as well as the direction provided by the strata council or condo board, when determining what amenities to ultimately provide,” says Williams. “In a rental property, a property manager can have greater influence over those decisions.”
Addressing live-work balance
Many condominium properties function as more than living units or investment properties. Modern urban homeowners want a place that makes it more convenient to live, work and play. They want to live somewhere conveniently located with respect to transit, shopping and entertainment. They also want to live in buildings that possess amenities that enable them to pursue the live-work lifestyle. This may include flexible floor plans, fully equipped meeting spaces and/or 24-hour business centres.
Many new buildings are being constructed with the live-work lifestyle in mind, and existing buildings in prime locations are adapting to satisfy their residents’ lifestyles. Some residents also want access to their own vehicles, even though public transit is accessible. As a result, car storage and maintenance support services are in as great a demand as office support services.
“In one Colliers-managed building, which is located in Vancouver’s downtown core, many of the residents work out of their suites,” says Williams. “Many of the newer amenities in the building involve technology such as Wi-Fi access and a 24-hour business centre. Tenants want 24-7 availability of services to support their live-work lifestyles.”
Property managers should look for different ways to accommodate their tenants’ live-work lifestyles. For example, they could hold various events for tenants such as yoga, bridge and cribbage nights. They could also host parent/child drop-in centres that provide tenants and local residents with opportunities to spend time with children in the middle of their hectic work schedules. While the type of amenity might vary, the goal is to accommodate this modern lifestyle.
Changing with the times
As a building ages, its demographic will also go through a transition. Individuals become couples and couples become families. New people move in while long-time residents move on, and the makeup of the community changes. With transition comes different wants and needs, and what were once desired amenities now become unused or unwanted.
Colliers often anticipates the needs of its tenants and the market, and repurposes underused areas to meet tenants’ changing needs. For example, unused exercise rooms can be converted into meeting spaces where residents can host family and friends or hold community-focused events. When amenities do not exist in the building, property owners will partner with private health clubs and fitness centres to provide tenants and owners with membership discounts.
When managing a building for the long-term, Colliers has found paying attention to changes in demographics and its residents’ needs is vital. Being in tune with these changes means understanding the community’s life cycle – from development onward. Recently, Colliers identified a growing trend of young families moving into a building and surrounding area. In response, Colliers added daycare spaces for both building residents and the local community to use.
“We put great emphasis on understanding our resident mix and their needs,” says Williams. “We’ve also had great success in working with developers and their visions for their properties and the type of buyers they want to attract. Part of this works through the type of amenities provided, which also goes beyond what has historically been seen as the norm. These new types of amenities include movie rooms, business centres, spa services, virtual golf simulators, bowling alleys, daycare services and community vehicles.”
The value of “human amenities”
Many condominium buyers and renters don’t think about the accessibility of building personnel and management when making a decision to relocate. However, these “human amenities” (or lack thereof) are the source of one of the biggest gripes of residents who have lived in a building for more than six months. Being able to communicate with a real person when a problem arises can make a big difference in a resident’s standard of living. It also makes it easier for a resident to pay rent, ask questions and report maintenance issues.
Colliers’ property managers are required to have a substantial on-site presence and develop relationships with owners and tenants. They serve as the primary contact for residents and provide access to service specialists when required. Colliers’ property managers are specialists in the types of buildings they manage (whether residential or commercial). As such, they function as “human amenities” by working diligently to meet their tenants’ needs.
“Service excellence” is at the heart of Colliers’ approach to institutional asset and property management. The company invests heavily in training (through courses in real estate and property management) to ensure its people are equipped with the core tools to ask the right questions, determine what tenants want and then translate these responses into building services and amenities.
“As managers of real estate, the best investment in our business is arming our team members with the training and tools necessary to support them in their interaction with people,” says Papagiannis.
The nature of the management business is that a property manager fills a number of roles in a building’s community (much like a mayor of a small town). Besides addressing maintenance issues, the property manager is expected to act as chief administrator, financial officer, bylaw enforcement, public works department and community liaison officer. By filling all these roles, property managers can better understand and address the wide variety of amenities their tenants demand.
Property managers also enable tenants to get to know each other, which can be difficult to achieve depending on the nature of the building. To facilitate greater community involvement, they will hold tenant/occupant information sessions in their building’s entertainment and party rooms. Property managers will provide news on what is going on in a building, what amenities are becoming available and how occupants can make use of these services, which leads to greater buy-in and support of changes to amenities in a building.
The end result of this focus on service is a well-functioning community, which leads to a positive impact on real estate. This means higher resale values and lower vacancy rates. According to Canada Mortgage and Housing Corp. (CMHC), the average vacancy rate in the Vancouver area is between three and five per cent; Colliers’ portfolio has an average vacancy rate of less than one per cent. These are telling statistics and are indicative of a focus on providing residents with what matters most to them.
“I have seen that a focus on the community approach can change the personality of a building,” says Gallagher. “It is an obvious advantage to tenant retention and, in any market, a key element to maximizing occupancy rates.”
David Gargaro is a freelance writer in Toronto.