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NAHB Statistical Model Helps Identify Apartment Features That Bring Higher Rents

A statistical model developed by NAHB showing how different amenities and features can have an impact on gross rents can help apartment developers and owners place a value on these features as they compare rents in their region.

The model can also help owners determine if specific property renovations are worthwhile.

While the NAHB model estimates average gross rents across broad Census regions and doesn’t include all of the features that can have an impact on rents, it can be used to show how changing the age, structural features, general location and neighborhood characteristics of an apartment in a building with five or more units tends to affect its market rent.

Using the model to analyze a “standard” 1,000-square-foot apartment, with two full baths, two bedrooms, two miscellaneous rooms and no amenities in a three-story building, Paul Emrath, NAHB’s vice president of housing policy research, identified several factors behind apartment rents.

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Except in the West, with the exception of large California metro areas, rents are higher in the suburbs than the central cities, and higher in central cities than in non-metro areas, the model found. Rents also tend to be higher in taller buildings, most likely because they tend to be built in locations where land prices are higher.

Looking at a standard apartment in a southern suburb, the analysis also found that:

• Newer apartments tend to command higher rents, partly because they have more popular floor plans, they are built to more stringent codes and they are easier to maintain.
• The feature with the largest impact on rent is a full bathroom, followed by a fireplace, a garage, a working elevator and an extra half bathroom. An extra miscellaneous room, with no increase in the square footage of the unit, has a relatively small impact.
• Recreational amenities are the most important neighborhood feature. A clubhouse, walking trails or proximity to a body of water have the largest positive impact on rents.
• The biggest negative impact on rents from the neighborhood came from abandoned buildings or buildings with metal bars on the windows within one-half block, or roughly 300 feet, of the front of the building. Trash or litter in the neighborhood was put a significant drag on rents.

For more information on the NAHB model, e-mail Paul Emrath or call him at 800-368-5242 x8449.
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