How tenant trends, boutique apartments and Airbnb are playing out in the Charlotte market

Jun 24, 2016 –  In targeting the user who wants a specialized live, work and play experience, the term “boutique” is being used more often to describe new developments.

Hoteliers have led the trend, using the word to market new flags, but boutique apartments also are being added in the booming multifamily industry. Designed with fewer units and unique design features intended to provide a more intimate setting than a tower with hundreds of apartments, these boutique complexes are geared toward a “niche” apartment dweller population.

So says Marcie Williams, president at RKW Residential, which has regional offices in Charlotte, Miami and New York. RKW Residential acts as property manager, provides resident and advisory services, and manages construction across its multifamily real estate properties.

In the Charlotte area, its properties include Mezzo1 in SouthPark, Cedar Flats in uptown and The Residence at Tailrace Marina in Mount Holly. The company has about 2,000 units in the pipeline that will be leased out in the next 18 months.

Williams, who has operated on the apartment property management side for 25 years, spoke to the Charlotte Business Journal about what contemporary renters are seeking, the future of apartments and how online rental services could disrupt the industry:
Do you think boutique apartments will remain popular as renter demographics change?
(For) developers and people that are buying, it’s attractive because you don’t have to raise as much capital to buy these deals — you can use friends and family money versus institutional investors. I think they have staying power because the aging millennials are going to want a place, the baby boomers are going to want a place. It has more of a home-like feel than some of the larger (communities). Some people are afraid to go from a single-family home to (an apartment tower) because it’s a big jump. (The boutique apartment) is a good step.

Have online rental services such as Airbnb affected the market?
In Charlotte, it hasn’t had a big effect. But we also operate in Miami, and it’s huge there. We have had companies that come to us and say, “We want 10 apartments and we want to rent them out on a nightly basis.” We’ve really struggled on how to manage that process, to make sure that the residents are satisfied. If you live next door to somebody that comes and goes, you’re not going to like that. Our leases don’t allow subleasing. We don’t want it to be disruptive to the people who have chosen to live at a property for one, two or three years.

Do you see that affecting Charlotte eventually?
We’ve always worked with local corporate housing companies (that will) rent an apartment for a year, but they’ll have Bank of America employees who will come in and stay for three months at a time (as part of) their relocation package. To rent on a nightly basis, it’s something we’re going to have to face. If you sign a lease with us, it says you cannot sublease. If we see that you’re advertising on Airbnb or VBRO, we can stop that because your lease specifically prohibits it. But it’s still a reality that’s coming. We allow companies to come and rent an apartment; it’s just a matter of how long we want them to sublease it.

What are some other challenges that you’re having to grapple with? How do you remain competitive?
I think service is what sets anybody apart. When you walk into the door, we need to be there greeting you and making sure that we’re taking care of you the second you walk through the door. Everybody is going to have similar amenities. I think people are trying to separate themselves through technology — maybe it’s adding a Nest Thermostat or Google Fiber, but at the same time, service beats anything. The biggest challenge is, as new product is coming along, how do you differentiate yourself? Service is going to stand the test of time.

What are some of the biggest tenant demands that have changed since you started working in the apartment industry?
When I started, apartments were really big. The amenities were not as plentiful and they weren’t as elaborate as they are today. Fast-forward 25 years, the apartment size has gotten a lot smaller, by about 100 square feet, and the common-area spaces have gotten a lot bigger. They’re going to have granite, stainless steel and really nice features. I equate it to a hotel. If I’m in a hotel room, there are times when I want to be by myself, but I also like to go to the lobby and be on my laptop, but be seen and a part of the action. I think that’s how apartments are today. Apartments are smaller and amenities are bigger and more plentiful. That’s been the biggest change.

Do you feel optimistic about the future of apartments here?
I’ve been able to ride the apartment wave for 25 years now, and I’m not ready to fall off the surfboard yet. I do think it’s going to continue to grow. There are always going to be ebbs and flows in the industry. I think boutique apartment communities are filling a niche for the expansive demographic that’s coming into the market. It used to just be where people in their 20s and 30s and divorced dads lived. It’s across the spectrum now, so developers and owners have to build for different types of residents. How do you put them together? How to build for a 25-year-old and a 55-year-old is really hard, but I think with some of the amenities, like the pool, you’ve got a 30-year span. A baby boomer might go out there and swim some laps and a 25-year-old might go out there, drink a beer and just bake in the sun. Someone might go to the treadmill and run five miles while a boomer might walk two miles — you’re still using the same facility and treadmill.

As long as it can attract that wide span, I think apartments have lasted a long time and I don’t see them going anywhere.