Elik Jaeger President & CEO at SuiteSpot Technology, frictionless facilities management PropTech for multifamily operators.
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The multifamily housing business is a great business to be in. Every day we have the opportunity to provide a wide variety of people with what most believe is among the most fundamental of human needs.
From a business perspective, we should also admit that it’s been a great business to be in because we’ve been insulated from many of the trends and growing pressures that have made navigation more complex and difficult for most other industries. Three driving forces have protected multifamily owners and operators:
• Real estate is a local business, and that localization has historically presented a buffer from many of the changes that have dominated the business landscape. Globalization has brought tremendous disruption to individuals, businesses and governments, but no one is offshoring their home.
• The local nature of the real estate business has also insulated the workflows, processes and approaches to managing our people. While we’ve certainly had to adjust management processes over the last decade, our fundamental staffing models and approaches haven’t changed, if for no other reason than they haven’t had to.
• The multifamily industry is extraordinarily resilient. The industry has always been relatively recession-proof, but as the last decade has demonstrated, performance can be strong in all market cycles.
Three Trends Accelerating The Digital Transformation In Multifamily
The insulation that has provided a buffer has shown signs of erosion. Even before March, we saw changes that would have been considered revolutionary just a few years ago.
Today, we see three factors putting new pressures on operators:
1. The pandemic is proving to be a major accelerant.
As noted author, professor and business advisor Scott Galloway described, the pandemic is an accelerant, rather than a change agent. According to one summary of his Festival of Marketing address, “he advised leaders to expand every trend out by 10 years and ask if their business model, structure and culture is where it should be, because a decade’s worth of change has happened almost overnight.”
Covid-19 has changed the formula for effective property management and will require operators to rethink nearly all aspects of their on-site services and human resources strategies. If operators haven’t already accepted these changes (and more to come) as part of what will emerge to be the “new normal,” they must do so now.
2. The nature of the labor pool has changed.
The local nature of real estate is becoming an obstacle as the nature of the labor pool is nearing the end of a generational transformation. Finding the right people to do what needs to be done on-site within cost constraints is harder than ever, and it’s not going to get easier. Finding ways to reduce dependence on people and to radically increase their productivity is quickly moving from “nice to have” to “must-have.”
3. Residents’ expectations are changing, too.
On one end of the spectrum, you have millennials and Generation Z, while on the other you have the retiring baby boomer generation. These populations are more important than ever, and their expectations have changed. They expect experiences, smart use of technology and greater control. Waiting for a maintenance worker to show up to fix or inspect something isn’t going to cut it anymore.
The Winners Orchestrate The Smart Use of Technology To Deliver Superior Experiences
Warby Parker. Rocket Mortgage. Dollar Shave Club. Netflix. Airbnb. What do all of these companies have in common? They’ve found smart ways to integrate technology to create high impact and deliver three wins:
• Delivering a superior customer experience.
• Providing both the buyer and seller with greater control and insight.
• Lowering costs of execution.
As Brian Halligan, HubSpot founder and CEO, shared in his INBOUND19 keynote, “They make it incredibly easy on the customer to do business with them. You can’t find a speck of friction in their customer experience.”
Friction increases the cost of the experience by reducing productivity, increasing the need for redundant activities and reducing synchronicity. That cost is tripled by its impact on the experience of residents and employees. These companies have systematically identified important touchpoints where low- to no-value friction occurs, and then utilized technology to eliminate that friction and enhance the overall experience.
Multifamily operators today also have the opportunity to eliminate these barriers, improve business and positively impact resident outcomes.
PropTech 3.0
Stop for a moment and celebrate the revolution that has occurred inside your corporate headquarters and leasing offices. The way you market properties, qualify potential residents and lease and manage properties have, for the most part, been transformed by digitization.
Now consider how you manage four important operational areas:
• Turnovers
• Renovations
• Inspections
• Maintenance
You’re likely using technology to store information, but fundamentally, has your core operational process changed? Most likely, it hasn’t. While technology enables you to manage more activities, it hasn’t eliminated friction. In fact, in many cases, it’s introduced new forms of friction. It also hasn’t improved the resident experience, financials or efficiency.
The demands today are greater than ever before. Thousands of activities, people and third-party vendors must be highly orchestrated to deliver on the promise of frictionless operations and great resident experience.
No one should “buy” technology. Instead, they should view it through the prism of “hiring” technology to enable jobs to be done better and faster. Doing this requires the successful integration of two historically opposed approaches: a consumer-like frontend for ease of use and a strong enterprise backend for stability, security and to support integrations. Now more than ever, you must know who will be using the technology, how they will use it and in what jobs. Then, be sure your technology successfully addresses all of their needs.
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