The unexpected is business as usual in New York real estate, where priorities and plans can shift on a dime. But one development firm I know of recently made a move that had veteran industry players taking note of a major change we're seeing in the industry—it delayed the official opening of a new apartment building to install more amenities.
It's just one more way demographic shifts are having profound effects on the multifamily housing market. The demand for amenities—everything from luxury dog spas to Internet-connected collaborative workspaces—is creating a real estate race among well-capitalized developers of next-generation apartment buildings. The demand by Millennial consumers for so-called “smart buildings” with a trove of on-site perks is driving a reinvention of multifamily stock. Investors need to recognize these evolving demographics and be responsive to a new wave of demands.

A demand for amenities
Amenitization is one of the new keywords for investors in the red-hot multifamily market. It reflects the fact that, though the square-footage of an average apartment unit may be smaller, consumers are still spending more time within the building in spaces that often include movie theaters and other social areas.

The race for developers to out-do one another with amenities owes partly to the age of consumers. During Capital One's fourth annual survey at ALM's RealShare Apartments Conference last fall, 72% of real estate executives predicted that technology-savvy Millennials will have the greatest impact on multifamily demand this year, followed by Gen-Xers (16%) and Baby Boomers (12%).