It`s so good to feel wanted, and some apartment buildings are giving renters a special come hither-beyond panoramic views, mini-blinds, fireplaces and ceiling fans.
They`re rolling out a red carpet of rent incentives.
And while it`s common for newer rental properties in the city and suburbs to offer such perks to fill up all those vacant apartments, older buildings today are using similar marketing techniques.
The reason? In a word: competition.
”If a new building goes up and the new building is offering rent rebates of some kind, the other buildings in the area review their marketing plans to come up with an offer that will be as attractive to renters,” said Sharon Stilwell, office manager of RELCON Inc., an apartment-finding service based in Naperville. ”Competition is what drives the incentive programs in new or old properties in or outside of the city. Everyone has the same goal, to get a 100 percent occupied building.”
In 1990, seven apartment buildings with a total of 1,080 units opened in the downtown Chicago area, said Eugene Krell, a consultant at the Chicago-based Real Estate Research Corp.
By the end of 1991, 2,699 more units will have been added, Krell said.
One of the newcomers, Cityfront Place, which opened May 1 at 480 N. McClurg Ct., has been offering a variety of incentives.
Cityfront residents who signed a 13-month lease were given one month of free rent. Those who signed a 26-month lease received four months of free rent.
”It`s a way to introduce people to a new building,” said Lex Woodworth, Cityfront`s building manager. ”Most people are curious when they see a new building go up and they want to know what that building has to offer that is different and better. They make their decision based on the quality product they see.”
And, as for the rent incentives or concessions, Woodworth agreed: ”They do help.”
Many buildings spread the free month`s rent over the course of a lease. So, if someone rents a $650-a-month apartment on a 13-month lease with one month free, he or she pays just $600 each month.
Tangible incentives
The new North Pier Apartment Tower, 474 N. Lake Shore Drive, offers rent incentives, but the management described those incentives as ”more physical than monetary.”
”We work more closely with the residents to see what they may specifically need to help close the deal,” said Dona Laketek, vice president of marketing at Broadacre Management Co., which owns the North Pier building. ”We individualize it. In some cases we throw in a microwave oven. We may add additional closet racks or let people move in a few weeks before the lease starts, at no extra charge, so they can begin decorating or get settled.”
Increased competition from new properties has forced established buildings to jump on the incentive bandwagon as well.
The Manhattan, at Dearborn Street and Congress Parkway, offer deals from time to time to coax new renters to look its way. The Manhattan, which was converted from offices to apartments in 1983, is now offering one month of free rent. But it has also offered other deals, such as paying a portion of a resident`s electric bill or giving a larger apartment to a tenant for the price of a smaller one.
”The whole idea is to have an occupied building,” said Timothy Telling, vice president of the Manhattan`s management company, Strobeck Real Estate Inc. ”It`s worked out pretty well for us. The people who have signed leases because of the incentives have stayed on because they like their apartment and the building.”
Telling said the Manhattan`s studio apartments are the most popular units requested by apartment shoppers.
”On occasion we allow a tenant to stay in a one-bedroom at the studio price and the tenant then has the option to stay in the one-bedroom until a studio becomes available,” Telling said. ”If a studio becomes available and the tenant is happy with the one-bedroom, then they are charged the regular one-bedroom rent.”
Another lure has been the building`s utility bill deal. ”We tell residents that we expect the electric bill to be a certain amount each month and if it`s over that amount we make up the difference by reimbursing them,” said Telling.
Rent incentives are not limited to downtown locations. In Lake View, a 30-year-old six-flat building on Aldine Street leaves the door open for some residents to negotiate.
”The rent on the two-bedrooms is $800, but we can talk about it if it`s one of the apartments in the back and the view is not so good,” said the building manager, asking that her name not be used. ”We can go a little lower than the $800, but I don`t want to advertise that. It`s up to the people to ask.”
Deals are often available in the suburbs, too.
Lombard`s Park Avenue Apartments gives new tenants two options-a month of free rent or a free train pass for a year. The security deposit is also less than the one month`s rent required at most buildings. The deposit is only $250 for apartments whose rent ranges from $745 to $1,200 a month.
”The year-free train pass is unique and different,” said Juanita LeRoy, property manager at the 2-year-old Park Avenue. ”We`ve had great response because of that offer. We offered the train pass because most of our residents use the train to commute to work and we are located within walking distance to the train.”
While supplies last
The Park Avenue, like most rental properties, offers rent incentives only at certain times.
”We`re getting into the busy season now and the building is almost all leased,” said LeRoy. ”Our incentives are generally discontinued at that time.”
Other common incentives are free or discounted health club memberships, waived security deposits, free bicycles, free credit checks, free shuttle service to downtown locations and allowances for decorating.
Still, many people have more on their minds than gifts and promotions when looking for an apartment.
RELCON conducted a survey of about 1,000 renters, asking them to rank what they wanted most in an apartment.
It found that renters ranked proximity to work/transportation as No. 1;
floor plans/design, No. 2; amount of rent, No. 3; recreational/social opportunities, No. 4; and proximity to schools/shopping, No. 5. Responses from city renters were similar to those from suburban renters.
RELCON`s Stilwell said incentives have their place, but she said not all renters are eager to take apartment buildings up on their offers.
”A good share of the people see offers that say the last month of the lease is free, and they don`t get excited about the offer because they don`t see or understand what the savings will be to them,” she said.
In it for the freebies?
And, Stilwell said, she is not sure incentives help buildings keep residents for the long term.
”I`m never totally sure how loyal the people are to the apartment buildings they choose when they do so on the basis of the incentives,”
Stilwell said.
The downside of incentives is ”that when the lease is up and the increase is made based on the market rate instead of the affected rate with concessions, renters are unhappy,” said one leasing agent, who asked not to be named. ”They feel they are being charged more than they should. The upside is felt by the company. If the tenant signs a new lease, the company is guaranteed that 4 percent or more increase and they have a tenant who will stay longer.”
