By Lauri Moffet-Fehlberg & Chris Apostolopoulos
Renovation projects, occupied or unoccupied, are seldom straightforward because, unlike new construction, they are challenged with the unforeseen conditions of existing buildings. Despite these complexities, renovating an aging apartment community, which was built for a much lower cost 30 to 50 years ago, can offer more rent growth potential than new construction. To begin, consider the big picture: What do you want this community to be when the renovation is complete? Do you have a clearly defined vision?
The answer to these questions provides a framework to evaluate what you should renovate and why. Following are tips to ensure successful and smoother renovation projects.
Big Picture: Responding to the Marketplace
It is likely that consumer preferences and needs have changed a lot in the years since your community was built. Renovation is an opportunity to remove underutilized amenities, such as theater rooms, and update existing amenities to spaces that today’s renter values, such as flexible workspaces and demonstration or catering kitchens. It is important to not renovate beyond the context of your community, as location is still a key driver to rent rates. The quality amenities within the project’s direct neighborhood may also influence the internal amenity offering. If you are located next to a popular health club, for example, then offering a fitness room may pale by comparison.
Microclimates across a region may also impact how you spend your site upgrade budget. Coastal winds and fog may discourage sun worshipping, but a toasty, inland climate may beg for a larger pool amenity. Regardless of market trends, the weather will affect the value received from money spent on exterior amenities. The one outlier to this is pets, especially dogs. To reach as many potential renters as possible, be prepared for your four-legged tenants with designated outdoor spaces for their needs. This can be tricky due to drainage and noise concerns, but a creative solution can preempt conflicts later.
Project Management Tips
Once the vision and goals for the renovation have been defined, implementing the following architectural principles and processes will help you run apartment renovation projects more smoothly. An efficient process will maximize the value-add of improvements to your existing apartment stock, while, in the case of occupied renovations, minimizing the impact to your residents.
- Include a general contractor or construction manager consultant from the start of design as they can provide valuable feedback to the developer and design team early in the process when there is the most flexibility for changes.
- Have a complete visual inspection preformed for all site improvements and building systems and materials. From this, you should develop a Capital or Physical Needs Assessment report, which is useful in identifying the scope of work by helping to prioritize items.
- Conduct destructive testing of key building systems and materials prior to the start of design to mitigate the occurrence and subsequent impact of unforeseen conditions during construction.
- Meet with jurisdictional agencies before the design starts to understand the approval process and duration given the scope of work. For example, if you are altering the exterior façade of a building, confirm what type of planning department review will be needed and how long the approval process is. This needs to be factored into the project schedule to avoid unexpected delays.
- Confirm if the scope of work triggers current code requirements to avoid costly surprises during plan check and construction. Get an understanding from the various jurisdiction departments, such as the building and fire departments. For example, some jurisdictions require compliance with the current accessibility and electrical codes when replacing kitchen cabinets or replacing drywall. Adding a fire sprinkler system is sometimes required depending on the magnitude of the renovation.
- Develop a phased construction plan to understand how the scope of work will impact residents. This will determine if the project is an occupied or unoccupied renovation. Phasing may also be a helpful solution to address budget constraints, allowing a property owner to space out costs.
- Create a communications plan to provide timely notifications to residents regarding the construction phasing plan and its impact on them. In addition to keeping residents informed of the renovation project status, include positive messaging about the benefit to them once renovations are complete, while acknowledging the inconveniences they’re currently experiencing.
Managing Complexities: Unoccupied or Occupied
Waiting for a community to be completely vacant before undertaking a major renovation project is usually neither practical nor financially feasible. Losing rental income while spending capital can deter investment in aging structures. However, there are a number of smart strategies to create as much offset as possible. Having a plan for tackling individual unit upgrades as tenants move on is one very successful mechanism. While it prolongs the overall construction time frame, it only creates incremental disruption for tenants. By creating a plan, you may also be able to hold sections of the building off the market and group unit upgrades. Offering these newly upgraded units to existing tenants may help you speed up the overall completion of unit upgrades.
Low income projects that receive federal or public funding have strict deadlines for completing the renovation effort. In many cases, a developer has 12 months to complete the renovation whose extent may require residents to be temporarily housed in either vacant units on the property or, more likely, off-site in housing with comparable rents. This can be difficult to find in a supply constrained market.
Renovation of an occupied community amenities creates yet another level of disruption for those living there. Extensive renovations of lobbies and leasing centers can be particularly disruptive, even creating the need for an alternate path of travel for potential customers. A clear plan and approach is crucial to define before starting demolition.
Overall, defining the project vision and goals and implementing these project management tips will help you achieve your goals in the most effective manner, while minimizing unforeseen or unnecessary project challenges and inconveniences to your residents.
ABOUT THE AUTHORS
Whether it is her own studio, designed in a contemporary rural vernacular in Montana, or a mixed-use village on the West Coast, Lauri focuses on the integration of art, architecture, urban design and context to craft a unique sense of place. She stewards the environmental conscience of DAHLIN to understand and meet the challenges every project must overcome to be truly sustainable. Lauri’s work, extending the length of the U.S. West Coast, shapes the design of our community fabric.
Senior Associate – Senior Project Manager
An affordable housing market sector leader, Chris is well-versed in the various funding source requirements with specialized knowledge of building codes and cost effective, energy-efficient solutions.