Interior design isn’t only about the perfect finishing touches; it impacts capital allocation decisions. Interior design ties directly to measurable outcomes. Some of these include lease-up speed, retention, operating costs, replacement cycles, and asset value. It’s important to master “design that performs” to ensure budgets, timelines, and long-term ROI are protected. Designers need to play a part in development because they influence the same outcomes that owners are measured on.
Consulting designers too late risks increasing your costs. When designers aren’t involved early, projects are exposed to change orders, substitutions, and diluted intent, especially when it’s too late to be a quick fix. Keeping designers involved early helps to align design with your target tenant. It’s critical that positioning, buildability, and procurement are all built around this ultimate result. Up to 70 per cent of rework in construction can be traced back to engineering and design-related errors. Better coordination upfront reduces schedule risk and avoids rework expenses.
Layout, lighting, storage, and amenity programming are just a few key components of a space that impact renter decision-making. These elements are among the most visual and impactful for your demographic. There needs to be a higher priority placed on aligning development processes with the most impactful features for your audience.
How design decisions directly impact development ROI
From a ROI perspective, design either accelerates revenue, reduces future costs, or lowers risk. As such, here are three key things that help contribute to revenue support and design-driven financial success.
1. Interior design increases rent premiums, leasing velocity, and resident retention
Creating a strong first impression in your lobby, corridor and entries can help increase leasing conversion. An interior focused on livability will raise perceived value and satisfaction. Focusing on storage, lighting, and functionality helps the prospect to envision themselves living in a space and be excited to move forward in the process.
Amenity spaces that are designed for real use are another way to support retention and referrals and to differentiate from competitors. Doing your part to maintain cohesive design throughout the building will also improve the showing experience and help make prospective residents feel comfortable and at ease.
2. Lifecycle-driven design reduces long-term operating costs and maintenance disruption
Making choices for durability will save you in the long run. Lifestyle costing can beat upfront savings over a five to 10 year span. This means making design and product choices that stand the test of time, physically and in design, will positively impact your bottom line. Making an upfront investment in high-traffic protection details in common spaces will lower the amount of ongoing repairs and downtime experienced in the future. By limiting the number of repair tasks down the line, resident retention is more likely to remain positive. Repainting, flooring replacements, and service calls all pose an inconvenience to residents and expensive labour costs for you.
3. Early design decisions reduce development risk, delays, and cost volatility
Incorporating interior designers early in the process also helps to get a better idea of product availability, lead times, and operational requirements. This helps provide a more accurate portrayal of how long some things may take from a professional, rather than relying on blind estimates. Standardization supports procurement efficiency in this way and will help to secure consistent outcomes and timelines.
An ROI-first design framework for real estate developers, and critical questions designers must ask to align with ROI
As a developer, here are a few steps to help create a design framework that supports ROI:
- Define your primary investment goal (i.e. lease-up, retention, turnover cost reduction, repositioning, long-term value).
- Map your design choices with outcomes (what decision moves what metric).
- Make specifications for lifecycle and maintenance realities.
- Close the loop post-occupancy (i.e. leasing feedback, resident insights, etc.).
And as an interior designer, here are a few key questions to ensure design is aligned with investment goals:
- Who is our target tenant, and what problem are we solving?
- What are the biggest maintenance and turnover pain points in comparable buildings?
- What replacement cycles are expected, and what should last longest?
- Where should we standardize for efficiency vs. differentiate for market impact?
- What does operations need for cleaning, repairs, durability, and access?
It is critical to recognize that all operational components are meant to support a common goal. Whether the primary goal is retention, building long-term value, or repositioning in the market, each contributes to the bottom line. ROI will struggle without sustainable operations that support it, and design should always belong in development because it shapes ROI. Protecting asset performance and risk reduction can only be achieved through a comprehensive effort. Making the effort to leverage all perspectives in the development process will only support a process that delivers higher impact.
Designers can elevate their value to this process by beginning to speak about lifecycle, operations, and outcome-based design. This is a value that is often overlooked but has the potential to make a world of difference. Designers do so much more than finish spaces.
Daniel Kocur is Project Manager of Capital Projects at InterRent and brings 12 years of experience as an interior designer to his role overseeing and executing large-scale interior design and construction projects within the context of capital investment. With a DEC in interior design from Dawson College and bachelor’s degree in design from Concordia University, Daniel started his career in the world of high-end residential interior design before branching out and running his own practice for several years. Now harnessing those years of experience, Daniel is a key team member on the Capital Construction team in the realm of multi-family residential development both in terms of design and construction.
