AIM 2023: How Multifamily Can Reinvent Itself with a Subscription Model

Consumers are gravitating to subscription-based products and services, and apartments can take advantage of this.

Consumers – and apartment residents – are trending toward subscription-based programs. From Spotify to Amazon to pet services, their flexibility and reliability are things many crave, especially those from the younger demographic – yes, your future residents. 

The multifamily industry can incorporate this mindset moving forward and develop practices that reflect and support the new ways that people live.

Panelists Stacy Stemen, Senior Vice President of Corporate Marketing and Development at Passco Companies; Justin Choi, Sr. Director of Marketing at Sequoia; Delight Merrill, SVP of Operations at JVM Realty; and Mike Wolber, Chief Revenue Officer at Rent Dynamics; discussed this with moderator Dorota Firek, VP of Marketing and Partnerships at Tour24.

“People are willing to pay for convenience,” Wolber said. “Providing financial flexibility such as when and how much rent to pay and how [is desired].”

From streaming to music to shopping, “essential” subscriptions have emerged, especially for Gen Z (ages 11 to 26), which studies show subscribe to four of the five top “essential” subscriptions. This is their lifestyle and the panelists said apartment operators are wise to embrace and offer it.

Additionally, consumers seek personalization. Multifamily has identified a good deal of market segmentation beyond conventional housing. There are 55 or better and their unique needs; the BTR-SFR industry, which offers maintenance-free living, but still provides a yard for kids and pets. 

Operators can find ways to deliver through strategies such as amenities (think packages, dry cleaning, pet care, onsite pet lodging) and flexible rent terms like Airbnb’s short-term and long-term rentals and Sentral, which tells its customers that they can break a lease if they move to another community in its portfolio.

Challenge your supplier partners to provide personalization in their services if they do not already do so. 

Merrill said subscriptions are more than a business approach. 

“They aren’t about a particular product or service: It is a mindset that we do more than put a roof over someone’s head,” she said. “It’s about giving to people. Our residents are people with needs. This leads to better retention. It’s for prospects and for team members. You can provide this with creativity.”

Stemen has embraced rewards programs. Her prospective residents said during focus groups that “earning points on apps is what got them going.”

They also said they want home layouts that are wide and open so that all their friends can visit them.

Among those who are renting, asked why chose their apartment, the top reasons were the amenities; convenience and walkability; and availability of high-quality schools. And they wanted it all in one price (the rent) and not itemized.

Other Interesting Comments: 

• Stemen said a resident-to-resident subscription model is emerging where residents can earn their own extra income by providing tutoring, coaching, sports training, and meal prepping as services to their neighbors.
• “Flexibility is the key,” she said. “Bundle things smartly.”
• Wolber said modernizing amenity selection through local partnerships can be beneficial, such as embracing the new craze: Pickleball. 
• For Sequoia, car rental partnerships can be made into a subscription model where the cars are available in the community or nearby. This is especially valuable in areas where parking is expensive. Choi said his program doesn’t charge renters for gas, but there is a mileage limit.
• Choi partnered with Southwest Airlines so that his employees get their points quicker.
• Stemen is working on getting a hotel partnership with Hyatt. It has the potential of having her residents earn hotel points for paying their rent on time and getting “friends and family” room rates for family members visiting an apt renter.