Multifamily Developers Look To Slow Amenity Space Race As Costs Skyrocket

D.C.’s apartment “amenity wars” are coming to a head. Amid a tough financial landscape for new buildings, multifamily developers are reworking the scope and scale of residential amenities in an effort to focus on value and efficiency.

Co-workers looking at computer shutterstock_1248985669 This topic of residential amenities — the burdens they can place on the bottom line and how spaces can best be optimized to fit residents’ needs — rose to the forefront in a developer panel discussion at an April 6 Bisnow roundtable on the NoMa, Mount Vernon Triangle and North Capitol Street area.

Many developers in this area are dealing with these questions, as it leads the District in Class-A apartment development, according to Delta Associates’ fourth-quarter report. The NoMa/H Street submarket accounted for 2,953 units delivered last year, more than double that of any other submarket. The report projects NoMa/H Street will deliver 5,822 units over the next 36 months, coming in second just behind the Capitol Hill/Riverfront/Southwest area. 

In a city in which the average one-bedroom rents for $2,300 per month and most buildings can’t rise above 130 feet, every square inch is valuable for financing multifamily buildings.

But perks like dog runs, game rooms, pools, gyms and conference rooms make much of that usable space unrentable, while still adding heavily to the bottom line with upkeep, furnishings and programming. 

“We’re wasting all this space and then you have to furnish it, you have to maintain it, you have to heat it and cool it,” said Matt Robinson, principal at MRP Realty.

The developer is working on Phase 3 of Washington Gateway in NoMa, a 16-story tower with retail and 254 apartments. 

“Most expensive space in the building is what it is,” said Michael Darby, founder and principal of Monument Realty.

Monument’s NoMa project, SoNYa at 40 Patterson St. NE, will be equipped with a pet salon, resident-only scooter rentals, yoga and cycle studios, and a penthouse sports bar/game room. 

“We’re all competitive, and we’re competing by building more and more amenity space that is costing us a lot of money as developers because it’s eating into our rentable space, our profit space and the question is what’s driving that and how far do we go,” Darby said.

The conundrum comes at a moment when developers are hard-pressed to get any new multifamily projects off the ground, with the weight of inflation, interest rate hikes and supply shortages and delays all putting strain on the difficult task of making the math work.

“I would think almost no development projects in the city work right now for residential,” Robinson said. 

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Rethinking amenity space could be one way to bolster the bottom line. Downsizing shared spaces, some of which, as Darby noted, “aren’t really being used that well,” would increase the number of rentable units and produce more revenue. 

Robinson said his team is doing exactly that.

“The projects we have on the boards now, we’re being more efficient,” he said, “so it’s ‘can we do that same function in this clubroom space and shrink it a little bit more and not build this square footage that we don’t need?’”

He said for MRP, determining how best to optimize the space means boots-on-the-ground case studies.

“Some of that’s going around to our projects and other people’s projects and trying to go in the middle of the day or go in the evening and seeing what are people actually using verses what are we providing because there is a mismatch there,” Robinson said.

Work-from-home space — crucial to most residential developments in a post-pandemic era — is an amenity where looking at current daytime usage trends could help draw back on extraneous square footage.

Work at home space shutterstock_1120813820 “The work-from-home or hybrid work is going to continue on as we’re seeing,” said Ryan Stewart, vice president of development at Grosvenor.

Her firm’s 260-unit mixed-use residential building Grosvenor Union Market at 340 Morse Street NE is set to open this summer, delivering a public park alongside it.

Stewart said Grosvenor is looking at redesigning individual units to be more conducive to work.

“Residents are looking for more than just coworking space but flexibility in their actual unit themselves,” she said. “So figuring out ways to live, work and entertain within the same space is really what I think people are looking for.”  

For her firm, that means reworking spaces through design and furnishing so that even small spaces can serve many purposes.

“We’re finding some opportunities to think about adding in built-in work areas within a kitchen run,” Stewart said. She added that furniture solutions like retractable beds hanging from the ceiling are also options to transition a room from a workspace to a secondary bedroom as needed. 

When it comes to coworking spaces, the panelists said they are revisiting the offerings to make sure they are up to date with what residents are looking for in a post-pandemic environment. With people working from everywhere, gathering isn’t so much a priority as individual spaces to take video calls. 

“Everybody wants to be together, but separately,” Robinson said. “The next generation of design of these spaces is shrinking them and providing more spaces … so that everyone can have their own private space and work.”

Sean Sullivan, vice president of development at Boston Properties, was quick to agree.

“That is exactly how we’ve changed our design based on feedback from operators and partners,” he said. “We’re creating more private space, so the smaller one-person booths that can have a door closed so you can get on that video call without getting that ambient noise.” 

BXP is developing an 11-story residential building in Mount Vernon Triangle at 1001 Sixth St. NW, set to deliver in 2025.

Work-from-home amenities aren’t a focus for Manny Egoegonwa’s affordable-focused firm Cubed Partners, where many residents have fully in-person jobs. For the firm’s projects like 1232 4th, an all-affordable 98-unit building in NoMa delivering in 2026, proximity to public transportation is the most prized amenity for the renters.

“Locating our investments in transit-oriented areas is more critical to us than creating workspaces within the building,” Egoegonwa said. “There’s always going to be access to WiFi within the community space; we do have lounges where they can go up and camp, but it’s not open to the entire building.”

The same way that transportation is an important amenity for Cubed Partners’ buildings, Stewart focused on the perks the neighborhoods themselves can bring to residential communities.

“The neighborhood is becoming more of the amenity,” she said. “And the hope is that over time we can scale back on these underutilized amenity spaces and allow the neighborhood to really be utilized for what it is.”

Source: Bisnow