One of those companies was Home Properties. Knight saw an opportunity to capture residents who wanted to live in a top submarket but weren’t willing to pay a premium for an A-plus apartment. The company worked with an in-house designer who developed different packages by coordinating with vendors. The result? A menu of options from which property and regional managers could choose.
For example, for kitchen cabinetry, Home offers four options: a dark maple treatment that accounts for 75 percent of its current upgrades; an oak that’s used where cabinetry may be subject to more “wear and tear”; a light maple when the unit has less natural light; and a contemporary treatment using repurposed Asian rubber wood for a demographic desiring a sleeker look. Meanwhile, Home’s bath, door, and hardware selections are similar, regardless of the kitchen package that is chosen.
The Vinings at Westwood
The Vinings at Westwood was a solid B-minus/C-plus asset that catered to workers at Disney World, Universal Studios, and SeaWorld in Orlando, Fla. Because of the strong workforce demand, Seattle-based Pinnacle thought it could push the project up a notch and generate rental increases. Usually, Pinnacle does its rehabs as units turn, but at this property, it did the rehabs when residents went off to work.
“We believed that the residents who were there wanted to stay there and wanted to pay a little bit more for a nicer product,” says Scott Bigham, vice president of construction management for Pinnacle.
Location: Orlando, Fla.
Company: Olympic Investors and CS Capital Management, advisers to PERSI (managed by Pinnacle)
Number of units: 400
Amount invested per unit: $5,000
Rent increase per unit: $67
Pre-rehab occupancy: 93%
Post-rehab occupancy: 96%
Scope of rehab: Landscaping, exterior paint, plumbing fixtures, cabinets, faux granite formica countertops, and black appliances
“Standardizing gives us a consistent product, increases our purchasing power, and reduces the number of decisions our operations folks need to make in the field,” Knight says. “Style is a very subjective thing, and we rely on our in-house interior designer to develop standards that will appeal to a wide range of tastes. Our teams are great at leasing apartments, and as long as they can achieve the minimum rent premium for upgrades, they are empowered to do as many upgrades as the market will absorb.”
