Tiered Amenities Emerge as New Revenue Stream
In the hunt for new revenue, some luxury properties are experimenting with tiered or à la carte amenity packages. A recent webinar on property strategies highlighted this tactic, where residents can pay extra for 'club level' access to private lounges, reserved spa times, or other premium services, boosting NOI without raising base rents.
This strategy is part of a broader "hotelization" of real estate, where landlords transition from simply renting space to providing hotel-like services and flexible amenities to drive revenue and retention. This shift caters to tenants, particularly Millennials and Gen Z, who prioritize convenience and value-added services over sheer square footage. Beyond lounges, the à la carte model includes monetizing specific assets like premium parking, EV charging stations, and private storage units. Some property management firms, like The Klotz Group, have adopted an "airline model," charging extra for everything from premium views and specific floor levels to in-unit technology upgrades like smart lighting or speakers. The physical amenity landscape is also evolving to maximize ROI, with a consensus that underperforming spaces like generic clubrooms are no longer sufficient. In their place, properties are investing in wellness features like saunas and cold plunge pools, and trading large conference rooms for smaller, private co-working pods to meet the demands of hybrid work. In Chicago, new luxury developments are already deploying hospitality-inspired amenities as a key differentiator. The Saint Grand in Streeterville offers a resort-style rooftop pool and a high-end wellness center, while The Dylan in Fulton Market provides a 24/7 concierge and private dining spaces to create a premium resident experience. This unbundling of services allows properties to increase Net Operating Income (NOI) through ancillary revenue, a tactic seen as more palatable to residents than direct rent hikes. It directly addresses the challenge of offsetting rising operating costs without risking higher tenant turnover. The trend also includes offering rentable items and on-demand services. Some buildings now feature "gear rooms" where residents can borrow items like kayaks or camping equipment, while others provide access to on-site convenience markets where purchases can be charged directly to the resident's account.
