The Imperative for Taking a Newly Constructed Yet Empty Apartment Community to Profitability
By Michelle Widjaja, VP Marketing and Education, and Jeff Bosshard, CPM®, President of Multifamily Operations Woodmont Real Estate Services
First, let’s define stabilization. For multifamily properties, stabilization typically means reaching 95% occupancy. And the objective is to arrive there sooner than later.
Why does it matter? Simply put, stabilization defines when an investment generates revenue, improves operational efficiency and enhances profitability for both investors and the developer.
Many variables exist that influence when a new construction project reaches its break-even point and begins generating profit. Location, unit count, leverage and borrowing costs all play a role. Short-term loans, particularly construction loans, typically represent more expensive financing than long-term loans. As a result, investors are eager to reach stabilization, which often allows a property to transition from construction loans to permanent financing. That’s where net operating income, or NOI, comes into play. Lenders generally demand to see demonstrated NOI for permanent financing as it provides tangible evidence that a property generates stable income and can operate successfully.
Another variable affecting when developers reach profitability on new multifamily communities includes rental performance, specifically whether the rents achieved align with projections outlined in the pre-development proforma.
From an operational perspective, when we are tasked with marketing properties to attract residents, urgency exists to achieve 95% occupancy at the highest achievable rents. Most importantly, once this level of occupancy is realized, the project is generally considered stabilized. At that point, staffing models can be reduced, as new construction initially requires additional onsite leasing support; further, marketing and promotional costs can be lowered substantially. Further, if free rent was offered (often up to two months) to rapidly occupy a new building, this incentive can be discontinued.
Marketing New Apartment Homes
Like many lines of businesses and industries, marketing new multifamily housing to attract qualified residents remains a unique process that, at the same time, requires the marketing team to execute fundamentals and leverage the most effective platforms and tools.
By way of example, below are a couple of brief case studies on new residential communities that our teams at Woodmont Real Estate Services have successfully led from construction completion to fully leased up and stabilized communities on behalf of our clients.
Artisan Crossing in Belmont began leasing in early 2024 as one of the few Class A projects to open in this area of the San Francisco Peninsula in recent years.
Comprised of 250 apartment homes in studio, one-and-two-bedroom designs in four stories, the community offers 3,000 square feet of flexible commercial and community space. In addition to high-end finishes throughout the apartment homes, including quartz counters, in-home washers and dryers, private patios or balconies and wood-style flooring, the property features a swimming pool and spa. Additional community amenities include a well-equipped fitness center and business center and a rooftop terrace with an outdoor kitchen and BBQ, ample seating, hammocks and a large clubhouse.
Importantly, Artisan Crossing is located near hundreds of employers and thousands of well-paying jobs. A distinct feature of the property is its partnership with Community School for Music and Arts (CSMA), a 50-year-old nonprofit organization dedicated to making the arts accessible to all, particularly to those who might not otherwise have access to learning music and other forms of artistic expression.
For a new community, our marketing focus includes building awareness and ensuring the property appears where prospective residents are already searching.
- We ensure the community is listed on the major search engines and apartment advertising sites.
- We review each platform’s options to help the property appear prominently in search results.
- We evaluate the local market to determine which listing services and advertising channels are the best fit.
- We develop a plan that supports the property from opening through stabilized occupancy.
This approach helps generate visibility, traffic, and leases from the start. Equally important to the process are weekly meetings with marketing, management, and ownership to monitor, adjust and augment the marketing plan.
Critical to success is assembling the right team. Beyond the marketing fundamentals and tactics associated with creating community awareness, it is essential to build a team who can represent the community to prospective residents with a consultative sales approach.
Success ultimately came down to creating a talented team with strong leadership. Once the site was fully staffed, signage installed, and the team was well-versed in the community’s offerings, leasing activity began to accelerate throughout the spring.
Artisan Crossing achieved 95% occupancy by October of 2024 and became a stabilized asset for its ownership group.
The Millton in Redwood City represented a different challenge for our marketing team, in large part because it required us to follow certain mandates, protocols and procedures as an affordable housing community, otherwise known in industry-speak as BMR, or below market rate.
The Millton contains 120 apartment homes, all of which are below market rate rents ranging from 30%, 50% and 80% of the region’s Area Medium Income (AMI) requirements and are monitored by the City of Redwood City. The community represents the affordable housing component of a larger, mixed-use development known as Broadway Village.
While the fundamentals of marketing, prospect management, and customer service remained the same, the qualification, application, and leasing processes were governed by affordability requirements established with the City of Redwood City. As a result, applicants could not simply apply online and lease an apartment through a conventional digital workflow.
To support the process, we partnered with a third-party affordable housing specialist to build and manage a pre-application waitlist. Prospective residents completed a Resident Household Composition and Income Questionnaire to establish initial eligibility before moving into the formal qualification process. The system was instrumental in helping us manage applicant demand and maintain an organized leasing pipeline.
Marketing presented its own challenges because we were advertising apartments across multiple affordability tiers, including 30%, 50%, and 80% AMI levels. Each tier included different rent limits, income limits, and occupancy standards that needed to be clearly communicated to prospective residents.
Traditional advertising sources were utilized including Apartments.com, Zillow, Zumper, and Craigslist. However, because this was a fully affordable community, we expanded our outreach to specialized housing platforms such as Doorway Housing and AffordableHousing.com. Doorway Housing was especially important because it interfaces directly with affordable housing programs serving Redwood City and San Mateo County, helping connect us with qualified applicants.
The leasing process differed significantly from a conventional apartment lease-up. We opened the waitlist on a designated date, assigned lottery numbers to eligible applicants, conducted the lottery process, and then worked through applicants in numerical order. Once an applicant’s number was selected, we completed income verification, household qualification reviews, and any additional documentation requirements before extending a housing offer. While the overall process was like most affordable housing lease-ups, prospective residents at this community were first required to self-qualify by completing a Household Composition and Income Questionnaire through our affordable housing specialist before moving forward in the eligibility review process.
Additionally, our team spent considerable time educating applicants on affordable housing requirements, including income eligibility, household size requirements, occupancy standards, and compliance guidelines specific to each AMI tier. Occupancy limits ranged from one to two residents in studio apartments to three to seven residents in three-bedroom apartments, depending on unit type.
Leasing BMR and affordable housing units typically requires more time than a conventional apartment lease due to the extensive income certification and compliance requirements. While the background screening process itself is generally similar, applicants must provide detailed documentation to verify household composition, income sources, assets, employment, and eligibility under the applicable AMI program requirements often requiring multiple rounds of review before approval.
Establishing a partnership with Redwood City was also very important. City staff helped promote the community by distributing marketing announcements to their affordable housing interest list. We also maintained constant conversation to stay aligned and on schedule. Together, we worked to ensure full compliance with the approved regulatory agreement.
We began leasing The Millton in Q1 2026, and the community reached stabilization by early October, in less than eight months.
In conclusion, and while no two apartment communities are exactly alike when it comes to attracting residents, the process is usually similar. One constant remains: the ownership group is extremely pleased when we achieve stabilization ahead of schedule with 95% occupancy.
