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Apartment Payroll Expenses Volatile in Today’s Market

Apartment Payroll Expenses Volatile in Today’s Market

The volatile labor market since the start of COVID-19 and changes in technology are changing apartment staffing. In the pre-COVID-19 era payroll was one of the easiest line items to budget for, assuming a 2-4% increase each year. Not anymore. Since 1st quarter 2020, payroll movement has been all over the place, up 6%, down 2%, flat, up 8%. Now it’s down 3% year-over-year as of 3rd quarter 2021. This volatility is the result of two things. First, apartments are feeling the same staffing challenges as the rest of the labor market. Leasing agents and maintenance technicians are difficult to find, and it’s a very competitive market. That means some payroll “savings” are unintentional, resulting from positions sitting vacant longer than usual. Or periods of big growth reflecting increased salaries. Second, COVID-19 accelerated adoption of virtual leasing and virtual resident service technologies, which reduce the burden of on-site staffing teams and (as many of the REITs have commented publicly) can reduce the traditional staff-per-unit ratio, resulting not only in savings but also enhanced efficiency, allowing leasing teams to focus on the highest-value tasks.