Property management

Using IAQ as a Marketing Tool

Two Minnesota brokers sniff out the best way to clean air.

W hen potential tenants walk into an apartment, air quality registers, whether they realize it or not.

“When you go through an apartment, the first thing you notice is the smell,” says Matt Teasdale, an associate with Minnesota Brokerage Group in Minneapolis. With new or recently renovated units, “It's often the smell of new carpeting or carpet adhesives.”

“Which is really not very good for you,” adds Harold Teasdale, a partner and co-founder of Minnesota Brokerage Group and Matt's father. New carpeting and the adhesive designed to hold it are both sources of volatile organic compounds, or VOCs. Many of them, including the commonly used formaldehyde, have been classified as known human carcinogens by the Environmental Protection Agency.

But few tenants complain, the Teasdales say. Because it's such a common occurrence, the odor is taken for granted.

And because tenants don't complain, multifamily property owners don't do anything differently, although a simple switch to carpet tiles could eliminate the use of adhesive, reduce tenant turnover costs, and add to the property's value.

This is one example of the best practices identified in “Quality Rental Initiative,” a report put together by Matt Teasdale to encourage multifamily property owners and managers to turn negatives into positives when renovating and marketing their units.

Changing Attitudes

But moving property owners to action is not an easy task. Property owners are “reactionary,” Matt says. “They follow the saying: If it ain't broke, don't fix it.”

In the long run, property owners would benefit by meeting the challenge of indoor air quality head-on, the Teasdales believe. MBG specializes in midwestern mid-size multifamily properties built in the 1960s and 1970s. Along with buying and selling the properties, the company also renovates and rents properties, some of them as Section 8 and affordable housing.

In the markets where they work, teardowns are not common, Harold says. “It costs about $50,000 to rehab the properties, compared with $80,000 to $90,000 to tear down and build new. Unless the property is going condo, it's not happening. Instead, our job is to renovate for the next 20 years. Do it and do it well.”

Harold Teasdale's experience in the multifamily market as well as an interest in sustainable development has led him down several interesting paths, including the development of Jackson Meadow, a rural smart-growth community near Stillwater, Minn. While trying to build his own home there out of nontoxic materials, he began to see the value of using less-toxic materials in multifamily properties. “The question came up: How do you systematically approach and incorporate nontoxic materials into a renovation?” he says.

The question opened the door to a marketing opportunity to improve multifamily buildings' operations and indoor environment. “We wanted to alter the way in which owners approach quality in their buildings,” Matt says. “Too often apartments are operated inefficiently -- not well maintained -- and it's the tenant who suffers. Most of the time tenants accept the poor conditions because they think that's the way it is.”

At Harold's suggestion, Matt developed the Quality Rental Initiative program, which he characterizes as “similar to a hotel rating system, where four stars indicate that all best practices have been met.”

They hope to convince property owners to use the program as a way to differentiate their units. “Instead of trying to attract tenants by reducing rent, owners can market their properties as healthier in terms of air quality and air exchange,” Matt says. “If tenants feel that the owner is truly looking out for their well being, they might be inclined to stay longer, reducing the amount of turnover costs.”

“We say, use this program to differentiate your building; use air quality as a marketing advantage,” Harold adds.

The approach piggybacks on the current trend to make nonsmoking apartment units available, an active issue in the Minneapolis multifamily market. Nearly half the renters interviewed said they were extremely or very interested in living in smoke-free buildings, and more than one-third would be willing to pay higher rents for a smoke-free unit, according to a Minnesota Association for Nonsmokers report.

QRI is a blueprint for how to incorporate this knowledge and use it as a marketing tool. It focuses on the IAQ issue of air exchange, as well as using less toxic materials for carpeting, paint, caulks, and cleaning supplies.

Best Practices

“Good ventilation can overcome many things,” Matt says. “Air exchange is what affects your first impression of a building.”

“When you go through buildings all the time like we do, you become sensitized. You know immediately if a building has a good ventilation system or not,” Harold says. “Most times, they do not; it's probably 25 to 1. Minnesota is establishing standards for ventilation, but right now, most buildings do not meet the best practices standards we set.”

QRI recommends an air exchange rate of 10.6 cubic feet per minute per person, citing a Lawrence Berkley National Laboratory study that measured a 30 percent decrease in respiratory illness at that rate. A rate of 8 cfm is too low, but that is the rate found in many apartments, according to the QRI report.

“Lack of air quality also affects building longevity,” Harold says. “If moisture from baths and cooking doesn't get out through air exchange, it gets into the walls and creates a mold issue.”

That is when building owners need to consider the long-term effects of poor IAQ. When not addressed, poor ventilation can lead to roof, window and windowsill, sheet rock, and mold problems. The QRI report estimates a $130,000 reduction in sales price of a 30-unit building as the cost of unchecked poor ventilation.

Another best practice highlights the use of carpet tiles instead of carpeting.

“About every four years you have to replace carpeting in multifamily units. Not only do the VOCs affect IAQ, but think of what the old carpeting adds to the waste stream,” Harold says. In addition, proper installation requires professionals. As an alternative, QRI suggests using carpet tiles, which have a longer life than carpeting and are more resistant to mold and bacterial agents.

“Cost drops to 3 or 4 percent from 15 percent, a dramatic savings,” Matt says. “And carpeting tiles have a much greater resistance to bacterial and biological containments.”

“It also offers a cost savings to tenants,” Harold says. For instance, if bleach is spilled, the whole carpet doesn't have to be replaced, just the affected tiles.”

Implementation Plans

Recently, Harold Teasdale introduced QRI at a statewide conference and received a supportive feedback. “The most positive response came from the affordable-housing sector. They were most interested in learning how to implement the program.”

Currently the Teasdales are looking for an intermediary to implement the program on a marketwide basis. In the mean time, they've trained their own marketing staff to educate tenants about air quality, but “it's hard to quantify, so we don't know if it's effective yet,” Matt says.

“We hope to make inroads into the affordable-housing sector,” Harold says. “If it happens there, then people will take notice of the cost savings.”

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