In the early days of rental housing, it was the unit itself that meant everything to potential residents. In recent years, however, benefits offered beyond a resident’s four walls have played more and more of a role in whether someone wants to call a particular community “home.” Resident services have historically varied from community type to community type and even city to city. While that variance will no doubt continue, one trend will impact all markets: the need for more robust services.
In a recent episode of the HBO series “Succession,” the character Kendall Roy introduced a new kind of rental property product, Living+. He touted resident services for the senior living project as a cruise-like atmosphere with digital immersive experiences, special celebrity guest visits, and wellness clinics that work to extend human life based on the latest data. He tried to market it as part real estate company and part technology company. While others in the company thought the idea seemed far-fetched if not completely unrealistic, the presentation was well-received, and people were excited. This is fiction, of course, but the level of resident services explored in the episode is not too far off what we may expect in the future for some types of housing.
Where We Are and Where We Have Been
Before looking ahead to the future of resident services, let’s take a quick peek at where we are now and where we’ve been. Resident services have evolved significantly over the past decade as housing developers and property managers have recognized the importance of providing amenities and services that enhance the quality of life for residents.
This has led to a variety of new or somewhat new offerings, including fitness centers, communal workspaces, and dog parks. Technology-enabled services like online rent payment and package delivery lockers are also relatively new and meaningful for residents. Over the past three decades, resident services have also evolved to incorporate sustainable building practices and community engagement programs that focus on social responsibility and sustainability.
What Services Lie Ahead
Looking to the future, there is ample opportunity for resident services to grow. These services will largely become more technology-driven and personalized to meet individual resident needs and preferences. This could include services that leverage data analytics to anticipate and fulfil resident needs such as on-site food and beverage options or pharmacies, as well as the incorporation of emerging technologies like augmented and virtual reality to create immersive and engaging resident experiences that can be used as differentiators from other properties. The level of sophistication of these services will of course vary by location and rental price point.
One of the challenges related to implementing more robust resident services is obviously higher developer costs. Increased planning and management requirements are also a consideration. Another important challenge related specifically to affordable housing is the fact that increased resident services may impact affordability for some residents. You don’t want to offer so many services that you have to charge too much per month for anyone to actually be able to afford to live there. Finally, some affordable housing residents may not have the same level of demand for certain amenities or services, meaning they may be less interested in living in communities that offer what they deem to be unimportant services.
Tax Credit Advantage and Funding Questions
Affordable housing developers are already used to utilizing tax credits for new properties. Tax credits already have a significant impact on resident services, as developers may be incentivized to offer certain amenities or services to qualify for tax credits. This can be a positive outcome for residents, as it can result in improved living conditions and access to desirable amenities. That is why industry professionals, including myself, advocate for increased opportunities to allocate tax credits and increase basis boosts toward expanding resident services.
According to the report Funding and Delivery Models of Resident Services in Affordable Housing from the Joint Center for Housing Studies of Harvard University, government funding for resident services increased during the COVID-19 pandemic. However, maintaining high levels of government funding for these services, or securing and managing funding from multiple resources, were listed as challenges.
This is why I and others in the industry are advocating for even more opportunities for tax credits to go toward expanded resident services. Additional funding through government resources really does prioritize the resident because high-quality services can provide benefits like increased resident satisfaction.
Resident services have long acted as a differentiator for communities looking to stand out and catch potential residents’ attention. While some developers may opt for limited resident service offerings in the future to keep costs down, others will continue to offer more services, some at a premium price point, of course, while others will expand services while maintaining affordable housing standards. Ultimately, the decision about what will make sense has to do with each unique target market, and the specific needs of residents.