For just basic fixes that can realistically be done without completely scrapping the current apartment system:
a) Increased Item Count - Base apartments as we have them now should have the same item count as a small house: 200. The current limit on apartment placeables is far too restrictive.
b) Access To Features - New placeable items that can be used inside a standard apartment. One that allows access to the airship/submarine feature and another that allows the planting of multiple seeds for cross-breeding. The airship/sub feature doesn't need to give as much return as an FC's might, but allowing a small amount of access to this feature would be desirable imo. The indoor garden would be limited to one in a base apartment.
c) Lofts That Make Sense - Any furnishing object that can be placed on an apartment or house floor should also be placeable on a loft. It makes no sense that only table top items can go on a loft. A loft is not a table. It is basically a floor, and not being able to place furniture on it makes me wonder what the devs thought we wanted lofts for in the first place.
Non-instanced housing would still hold prestige, but it would no longer lock players out of certain features like crossbreeding and airship/sub missions. If the only difference between a standard small house and an apartment (as far as features go) is that one is out in the neighborhood and the other is instanced, I believe that most people would be satisfied with an apartment.
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For more robust features that would likely take significantly more effort by the dev team:
a) Multiple Tiers - Additional apartment size options that cost more so that, like houses, you can have a small (the current base apartment), a medium, and a large. Larger apartments would allow for more indoor garden planters and a higher furnishing item count just as larger house sizes do.
b) Free Company Apartments - A free company that does not currently own a house can purchase a free company apartment instead. They choose which tier (size) they wish to purchase.
c) Apartment Upgrading - Just as house owners can transition home ownership to a bigger plot, so too can apartment owners upgrade a currently owned apartment to a larger one.