Luxury apartment buildings in NYC are locked in an 'amenities war,' and it's highlighting a major problem in the housing market
- Luxury apartment buildings are competing for tenants with an increasingly flashy array of amenities, from rooftop dog parks to residents-only restaurants.
- The NYC real-estate market currently has an oversupply of luxury listings, The Real Deal reported.
- Jason Fudin, CEO of pop-up hotel service WhyHotel, says the "amenities war" has developed over the past decade.
High-end buildings are locked in an "amenities war," but it wasn't always that way.As Business Insider's Katie Warren previously reported, "Luxury apartment buildings are going to increasingly greater lengths to attract tenants, offering outrageous amenities that include rooftop running tracks and dog parks, outdoor movie theaters, and residents-only bars and restaurants."
But Jason Fudin, cofounder and CEO of WhyHotel, a pop-up hotel service that operates in brand new, unleased luxury apartment buildings, recently told Business Insider that the amenities war between luxury apartments is actually a fairly recent development.
"There's an amenities war going on," Fudin told Business Insider, "but that's a big change we've seen over the past 10 years. Buildings used to squeeze amenities into a space, and now those amenities are actually what you advertise."
"There's been an evolution there," Fudin continued.
Manifestations of the amenities war
Consider the Oceanwide Plaza in Los Angeles: upon completion, the building will include a two-acre "sky park" 100 feet in the air complete with two dog parks, a basketball court, lawns, a swimming pool, and a running track.Amenities also extend to dining and drinking; some buildings offer resident-only dining and drinking opportunities.
As Business Insider's Áine Cain previously reported, "You can't just walk into these restaurants from off the street and snag a table. They are reserved for the people who live in these astronomically pricey skyscrapers."
And it's not just adults who benefit from these amenities: Children aren't overlooked in the contest for prospective tenants' attention.
The soon-to-be-completed luxury residential tower at 15 Hudson Yards in Manhattan, for example, is specifically developing kids' amenities, like elaborate playrooms, video game rooms, and teen lounges in an effort to appeal to wealthy millennial homebuyers.
New York City has more luxury apartments than it can fill, and it's changing the way apartments are marketed and sold.
Some real-estate companies are carving penthouses up into smaller apartments to get them off the market. Others are relying on the use of price cuts and gimmicks, or, alternatively, increasingly lavish amenities to lure in tenants.Steven Rutter, director of new developments for Stribling Marketing Associates, an NYC-based luxury real-estate brokerage firm, noted that the so-called amenities war has been developing over the past several years "because of the amount of product that's come into play," particularly in NYC areas like Long Island City, Hudson Square, and Downtown Brooklyn, which are flooded with apartment rentals.
Rutter noted that amenities are part of the emotional decision that goes into choosing a place to live.
"There's pressure on pricing," Rutter said. "Landlords are offering incentives like months free or no fee, and that's the financial part of it. The other part is the emotional and aspirational part that attracts a tenant."
"At the end of the day," Rutter continued, "amenities are an attempt to appeal to the target tenant."
A different solution to unfilled space
WhyHotel cofounder Jason Fudin saw a different course of action for capitalizing on unfilled luxury apartment space.
"You deliver a building all at once," he told Business Insider, "but then it can't instantly fill itself. Ideally, you'd be filling the apartment in eight to 24 months."
WhyHotel, founded in 2017, takes that empty apartment space during the building's lease-up phase and turns it into pop-up hotels that guests can rent out for lengths ranging from one night to three months. The company currently operates out of three cities in the Washington DC area.
The rooms come fully furnished and see a mix of business travelers and leisure travelers across weekdays and weekends, respectively.Fudin also noted that there are three qualities in these luxury apartment buildings that allow them to double, temporarily, as hotels: FOB-based access control, depth of inventory, and consistency of product. Guests, in other words, have automated access to the building and their rooms, can expect to find a room when they want one, and know what kind of amenities and overall quality to expect from their rooms.
Ultimately, whether unused luxury apartment space is being used for another housing purpose entirely or is spawning additional amenities developments for tenants, the surplus is changing the game - and will likely continue to do so. Rutter noted that not only are new amenities popping up in buildings, but the level of thought and finish that goes into them is evolving, too.
"Even in fitness centers, the bar has been raised: Some buildings are now putting in Peleton instead of your standard treadmill or bike," Rutter said. "Even if it's amenities you've seen before, it's a higher level. Renderings of lounges really do look like the lounges of really nice hotels."