This October in Dallas, a climate where supply outpaces demand in some markets, multifamily leaders met to discuss how to get more revenue out of their Texas assets. Discussions focused on how to maximize amenities and get the biggest return on the dollar by basically understanding what residents really want through their actions.
At the Marcus & Millichap Dallas/Fort Worth Multifamily Forum, panelists agreed that some old-school fundamentals blended with the techy new trend of mining data can hold the key to if they attract new residents and retain the ones they have while achieving the highest possible revenue.
Moderator Hugh Cobb of Alpha Barnes probed High Street Residential Senior Vice President Gary Mann, Kairoi Residential Executive Vice President Tammy Feiling, Camden Director of Revenue Management James Flick, Pinnacle Director of Revenue Management Connie Aldape and RealPage Director of Asset Optimization Andrew Bowen about effective operation strategies that drive revenue.
Panelists believe that customer service and relationship building emboldened with the understanding of what renters are willing to pay for in various markets are keys to success.
Data identifies probabilities of renewals and new residents
Lease transaction data is being studied to identify trends that can help multifamily operators find the right prospects for the right types of apartments. Predictive analysis is trumping traditional pricing practices by factoring in various conditions, occupancy rates, rent rates and other data based on resident behavior to recommend a price.
Also, data is being measured to narrow the likelihood of residents who will renew.
“There are things about residents that are predictive of if they will renew,” Bowen said. “Things like their previous address, whether not they have pets, if they have a car. All of those have an impact on if that person is more likely to renew. As we get further into data, you start to see those types of patterns.”
Flick said Camden is using marketing data to match residents with the right apartments to avoid concessions and maximize revenue potential. Prospect information and trends are narrowing the candidate list so the front office isn’t spending an inordinate amount of time sorting through applicants who aren’t a match for the type of product being offered.
Traffic count may be lower but the property is capturing the resident who fits available product without conceding rent revenue. Flick estimates Camden’s guest card count is down 15-20 percent but closings are up 20 percent.
“When marketing gets proficient is by leveraging data to better understand that success and results these channels provides for us,” Flick said. “How can I get five prospects through the door and three to convert, not 20 through the door and three to convert. Measured business intelligence is looking at further honing that pre-qualified prospect. Fewer people are coming through the door but we’ll take that all day long because we are getting revenue at the right property and the right floor plans.”
Retaining the best residents at the best price
Deep dives into amenity data also helps yield quality residents who are willing to pay for certain perks like hardwood floors, granite countertops or fireplaces. Average time on the market and lease price determine whether the amenity is a deal or a dud for the resident and property at the street corner level.
“It’s about how you attain the best resident at the best price,” Bowen said.
With much new supply coming into the market, filling units has become more challenging in some markets. Occupancy inched higher to 95.8 percent in the third quarter but concessions are factoring into many new leases for first time in recent years.
Mann said his company is navigating through a “bump in the road” by looking at where it can maximize dollars on net square footage with the right amenities.
“Everything is harder now,” he said. “If residents don’t want balconies, we don’t want to build them,” he said. “But if they do, we want an amenity charge associated with them. If we can charge for a dog park, we want to do that.”
Aldape said choosing amenities that offer solid revenue opportunities combines data analytics and understanding the asset. Some amenities have a short shelf life and can play out just because residents have moved on the next hot thing and won’t sell at any rate.
Comparing to like properties in a portfolio or within a geographical area provides insight to determine whether those hardwood floors are actually worth it.
“It’s usually not price, it’s the amenity,” she said. “It’s usually been overshot to a point the market is not going to yield to that charge. It’s understanding the asset, walking the units. Is this an amenity that will get resident into the apartment?
“If you have (analysis of) 13.7 million transactions, that tends to be easier for us.”
Quality customer service is a retention item
So what are the emerging amenities? Panelists said dog parks in the urban core, smart home features, package delivery, bike stations and shared work spaces are favorites among residents. Some amenities that are taken for granted, however, may not hold as much weight as they have in the past.
Mann said that parking lots need to be re-evaluated because more residents are trading tires for sneakers in walkable communities. Turning that space into storage to accommodate those who are downsizing from the suburbs and giving up large closets is worth a second glance.
“In the upper end apartments, storage is a huge amenity,” he said. “We have empty nesters selling their homes and they are used to a lot of square footage. They need extra storage. We need to evaluate 1.2 parking spaces per unit thing. People are walking more and we don’t need all that parking.”
Apartment operators, however, can’t put a price on customer service.
The age of automation and artificial intelligence is providing more touch points in the resident experience, says Freiling, but don’t forget maintenance teams, who have been regarded as big resident ambassadors.
“Lease-up gets (residents) in and maintenance keeps them,” she said. “It comes down to the level of customer service. The relationship is something we are offering.
“It’s not a revenue item, it’s a retention item.”
Empower your team with the revenue management tools needed for success in multifamily. Learn more about RealPage Revenue Management.