CEO at Funnel Leasing, bringing renter-centric solutions to the antiquated property management software market.
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It is well documented that the pandemic accelerated digital transformation, in many instances replacing physical interactions with digital experiences. As a result, many businesses were able to reduce their staffing levels by replacing manual jobs with self-service (self-checkout being an immediately recognizable example).
In the field of multifamily leasing, this transition away from in-person engagements has brought another interesting question to the foreground: As leasing professionals move away from on-site work, how can they more efficiently utilize centralized options?
Having been in the multifamily space for the past 10 years, I’ve witnessed firsthand the consolidation among property management companies and the move toward scaling. The following is some background in the field as well as ways to shift to centralized strategies.
Centralization In Multifamily Leasing
The concept of centralization in the multifamily leasing world is not new. Enterprising companies have had their own in-house call centers for more than a decade. However, the overwhelming majority of leasing activity today still takes place on-site. To understand why that is, we need to first understand what centralization means.
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Centralized leasing relates to any effort to move away from individual property-based leasing and operational teams and centralize them in one or multiple regional locations to improve efficiencies and cut down costs. The pandemic placed new pressure and emphasis on driving down operational costs as well as a renewed interest in centralized models.
The emergence of single-family rentals as a viable industry has spurred innovation in this area. Unlike its multifamily cousins, single-family operators can’t have a single leasing or maintenance team per property. The necessity for multi-property teams has led to advancements in the areas of remote leasing and mobile maintenance.
However, the world of multifamily leasing has continued to lag behind. For decades leasing has required the same staffing levels. Whether you have a single 200-unit property or a portfolio of 100,000 units, the 1:100 rule (one on-site agent per 100 units) is often still the norm. But why?
Barriers To Centralized Leasing
One of the primary reasons for this lag is due to underlying legacy technology systems. Accounting software is built around a single community. This makes sense for accounting where each asset has different ownership groups, but multifamily technology companies built their entire leasing models around this same property-centric leasing model. This resulted in a lack of off-the-shelf, multifamily systems designed to guide a single renter through a multi-property apartment search.
That is no longer the case; large operators forced the industry to take notice of this need by turning to non-industry customer relationship management software (CRM) such as Salesforce and Microsoft Dynamics. Now, industry-specific CRM has emerged, which allows for smaller operators to utilize the same tools as the public real estate investment trusts.
Another historic barrier to centralized leasing models has been access. The aforementioned arrival of single-family rentals can help in this area. Tools like Smartrent, which recently went public via a SPAC, rode the wave of adoption for smart apartments and the knowledge gained in the early days of single-family residences.
Given the emergence of renter-centric CRMs and the abundance of IoT or smart apartment technologies, it would seem clear that centralization is here to stay. However, the biggest question still remains: How can multifamily operators embrace available technology?
Change In The Industry
While change is inevitable, it is also difficult. We have seen companies that have been successful at moving to a centralized model and reducing their operational costs and staffing intelligently. Much in the same way dynamic revenue pricing technology swept through multifamily after proving itself in the hospitality industry, businesses will get leaner and more efficient.
Preparation for any new technology is key. Getting buy-in among the affected teams is one of the most crucial elements in this preparation. It’s often helpful to roll out new technology to a small subset of core properties before scaling to an entire portfolio. And consistently testing and making adjustments to ensure the technology fits your specific needs can help ensure a successful rollout.
I believe centralized leasing will become the norm across the industry and continue to prove successful in delivering the same volume of leasing with a smaller staff. But it will require tremendous vision, commitment and resources. Some of the inputs needed in new lead management tools include the renters as the source of truth, reworked compensation models to incentivize cross-selling and referrals rather than commissions for sales at individual properties.
You can more efficiently utilize centralized options by placing your top-producing agents in one central location, staffing to accommodate seasonal trends and leveraging technology and automation to do more with less. These are strategies some of the most successful and largest companies in the space are utilizing.
The coming permanent shift to portfolio-level leasing will, if history is any guide, enable further leasing innovations, one of which is intra-portfolio renewals. Renters today who move to a new town, whether across the city or country, have little incentive to stay within the same portfolio. An opportunity that the hospitality industry long ago recognized and embraced is cross-portfolio cross-selling, a mentality that has enabled them to be the global leaders in loyalty.
Multifamily should pay close attention to these trends and actively pilot toward best practices using the example of their colleagues in neighboring industries. Leasing technology and a move toward a centralized model will touch almost every department in a company. Ensuring buy-in and easing concerns ahead of time is pivotal to a successful rollout. As more and more of the population rents by choice (and by need), the successful companies will be the innovative ones that adapt to a changing populace and its demands.
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