The U.S. apartment market continues to chug, but in moderation compared to much of its nine-year run. Some markets have softened, sparking some give and take in operational strategies.
When markets soften, the focus naturally turns from rent growth to maintaining occupancy, which often leads to concessions for new leases and at the sacrifice of rent growth on renewals. Softening markets – some created by new supply coming on line, others by changing demand levels – have led to discounted rents in some major metros.
Such activity challenges an operator to build and maintain a rent roll while keeping occupancy up, and rent growth often takes the hit. But just because the market loses a little steam doesn’t mean that revenue has to be sacrificed. There is always money to be made regardless of market conditions, according to RealPage’s eBook, “Proven in Any Market Cycle.”
The story of how three companies outperformed during downtowns is one of strategic pricing decisions made through the use of revenue management software. Greystar, Trammell Crow Residential and Carter Haston leveraged RealPage Revenue Management and applied asset specific strategies, experiencing some impressive results.
Demonstrating the impact of effective pricing strategies
Greystar sought a revenue management solution that could handle various product types, client strategies and market conditions. What the company found was that their data-driven revenue strategy delivered a sustained revenue premium of 3-7 percent.
Needing a revenue management system that could help maximize revenue streams until the economy picked up, Trammell Crow realized more than a 3 percent boost in revenue. This was achieved thanks to a solution that determined unit pricing based on unit type, availability, move-in date, lease terms and more. Not only does RealPage revenue management determine the right price quickly, it also provides transparent analytics to justify price recommendations.
Carter Haston used a similar approach to win the battle of low occupancy during renovations in a difficult pricing environment. Occupancy improved by more than 8 percent and Carter Haston achieved rent prices nearly 3 percent higher than expected.
Each company realized the benefits of revenue management that ultimately kept them moving forward without leaving a lot of money on the table. Operations teams quickly gained confidence and enthusiasm in their ability to lease apartments without using concessions.
Delivering a sustained, verifiable revenue premium
These companies provide examples of how the combination of designing an effective pricing strategy, reviewing renewal leases and examining new lease prices – all key attributes of RealPage Revenue Management – produced optimal revenue.
Each case study proved that the best way to approach pricing for a softening market, created when supply outpaces demand, is to set an asset strategy that aligns a portfolio’s goals with the behavior of the market. This is done by utilizing more than just market data, but also leveraging dynamic pricing centered around a robust set of data.
Operators don’t have to give up on revenue performance when the market changes. Does your revenue management solution compensate for changes in supply and demand and optimize revenue growth?
Download “Proven in Any Market Cycle” to read the full case studies.