In a competitive environment, all apartment properties are looking for the best way to entice renters to choose their building over a neighboring community.
In the multifamily apartment world, each property is competing to offer the best amenities, the best floor plan layouts, views, service, prestige, or just convenience, and all at the most competitive price. However, another way apartment communities look to improve their occupancy is with a variety of apartment leasing incentives, also referred to as leasing concessions or rent specials. Here we will dive into the different types of offers that are presented to prospective tenants.
In an effort to simplify, most leasing incentives will fall into one of these four categories:
An incentive from of these categories will each have its own benefits and drawbacks. Better understanding what these are will help you determine the best course of action for your property. For the purpose of this discussion, we provide some basic examples of each type of incentive below, for a more in-depth library stay tuned for our upcoming ultimate list of apartment leasing incentive ideas.
Incentives in this category all relate to some form of discounted rent. A flat amount discount or a rent coupon can help provide a better understanding of your offering from the get-go. Free or reduced rent are great options when looking for an eye-catching offer.
Your decision on the appropriate incentive from this category may also depend on other factors, such as your own financial situation, marketability, and the type of renter you may attract. Let’s dive into these factors for a moment.
Should you spread the incentive out over the course of the lease or provide it as free rent upfront? They both can have their advantages.
In this public study, we can see that 71% of respondents would prefer a greater amount over the course of their lease versus a discounted amount upfront.
In the same study mentioned above, 21% of respondents, would take a 10% discount to receive the incentive upfront versus reduced rent each month.
Discounted rent is often the most popular choice for apartment leasing incentives, as it can appear to cost a property no cash upfront to offer, however it is often easily forgotten by a renter, and not only does it not provide any long term value to your property, it effectively discounts the value of your product. With those aspects in mind, let’s dive into other ways of providing value to a renter.
Long studied in the area of corporate incentives, while gifts and giveaways do not have the same appeal as cash at times, they do provide an opportunity to cater to the recipient’s interests and wants.
Gift cards create memorable experiences.
Incentives are used to reinforce positive behaviors and drive specific results, so the participant must remember why they were rewarded. Gift cards create an experience participants will remember and provides them with something tangible. This turns into a lasting reminder of their achievement while cash incentives are often forgotten about.
Gift cards are not viewed as discounted rent.
Cash rewards are often associated with discounted rent and disappear into the family budget. This begins to take away from the positive feeling of being rewarded upon lease signing.
Gift card purchases = guilt-free spending.
Gift cards allow participants to treat themselves with a fun experience or item they wouldn’t have paid for otherwise (or may not be able to afford).
Gift cards combine the benefits of merchandise and cash rewards.
Gift cards give participants the excitement of shopping the rewards catalog (which is half the fun) and the flexibility to buy what they want online, in-app or in-store.
Gift cards build brand awareness by (sponsor) association.
Gift cards offer a vital branding opportunity by allowing companies to associate themselves with leading brands that their participants recognize and are already loyal to.
Gift cards hold their value when markets are down.
Gift cards hold their value during uncertain times – such as a recession. When budgets are cut, and the money is at an all-time low, gift cards always come in to save the day – helping renters when they need it most.
Gift cards can be shared with loved ones.
Gift cards can be shared with the participant’s family, which leads to a shared redemption experience. When the renter’s family is involved in selecting rewards, they’re more likely to support the renter’s goals.
Gift cards have storytelling power! (aka word-of-mouth marketing)
Gift cards are more discrete than cash, which makes for good storytelling! Renters won’t tell each other or even remember what they did with the cash they received – but they will share stories about their gift card purchases.
Gift cards provide more compelling marketing opportunities.
Unlike cash, gift card rewards allow companies to leverage major brand names in their marketing. This keeps renters engaged, excited, and coming back for more.
Gift cards generate useful customer data.
Gift card redemptions can be tracked to help companies to better understand their market. This data can also be used to develop more strategic communications and marketing plans.
Put simply: giveaways and gift cards are more memorable and can create a more positive relationship with your property and brand.
Leasing concessions are often used at the lease signing table to encourage a potential renter to sign a lease sooner and create a sense of urgency. They can be great ways to provide additional value to a renter with minimal cost to the property. However, with the exception of making apartment upgrades, most leasing concessions are easily forgotten by renters. Here’s a deeper look.
This category encapsulates any combination of different incentives from above. Often we see discounted rent paired with a leasing concession or a giveaway, with one being advertised and the other used as a signing incentive after a prospect tours the property (i.e. if you sign a lease within 48 hours of your tour, we will offer you free parking for 6 months).
Creating interesting and lasting incentive packages by mixing and matching some of the ideas above will allow you to stand out from your competition, improve your turnover ratio, and ultimately increase the value of your property.