The dramatic shift in multifamily housing resulting from COVID-19 has required new solutions for how vendors and service providers can help keep America’s apartments running. For operators, managing spending has become more challenging for an industry that is still trying to find balance.
Apartment demand for the second quarter was sluggish, with most leasing activity registered in June. About three in 10 of the country’s biggest markets suffered net move-outs from their apartment stocks, with the biggest hits in New York, Los Angeles and San Francisco.
At the same time, social distancing restrictions eased as states reopened to revive an economy that had slowed considerably. Since then, multifamily housing maintenance teams have been getting back to work.
The result is that apartment portfolios are feeling added pressure on spending for make-ready services and maintenance. Now is a good time for multifamily operators to work with their vendors to put a plan in place for recovery, industry professionals say.
“Overall, spend is recovering, as more new leases mean more make-readies, and companies start to tackle the pile up of pending maintenance requests,” said Sara Jones, who is senior vice president of spend management at RealPage. “A strong sudden demand for supplies and services could stress the supply chain.”
Need arises to better manage expenses to offset lost revenue
Key suppliers in RealPage’s vendor management program say they’ve had to adjust and find new solutions to keep goods and services flowing so apartments can move forward with repairs and maintenance.
Doug Peterson, Vice President of Multifamily Sales-National Accounts for HD Supply; Scott Matthews, Vice President Pro Outside Sales for Lowe’s; Brian Mendelson, Vice President, Business Development at AZ Partsmaster; and Jeff Melton, Vice President of National Accounts for RediCarpet joined Jones in June for “Smart Solutions: How to Adapt Your Spend & Vendor Management Today,” an on-demand webcast that discusses how the service industry is coping.
A pressure point has been the need to better manage expenses to offset lost revenue as much as possible. Jones said vendors are facing several hurdles, including returning maintenance to buildings, processing maintenance backlogs, slowdowns on rehab projects and adopting new delivery methods.
In addition, apartment operators have been challenged by getting invoice approvals of payments under remote staffing, locating new vendors and sustaining cleaning services at new levels.
Companies are finding new ways to adapt to the workload through alternative work schedules, new processes and procedures while remaining compliant with local and state guidelines. Some have adopted new or expanded product lines, including personal protective equipment, to meet the changing way of business.
“We’ve been required to source new products,” Mendelson said. “For example, thermometers. We’ve never carried that before, but now it’s an important need for our customers opening up their offices.”
Matthews is seeing a trend among Lowe’s customers who have pivoted from interior work to outside work in the wake of the pandemic.
“You’re starting to see more repairs versus actual installations inside the homes,” he said. “Less projects where more and more customers don’t want people in their houses.”
Helping apartments get back on their feet
Companies are being resourceful to help properties get back on their feet and make up for lost revenue by offering savings on supplies and work. Some are extending special incentives or services to properties enrolled in RealPage’s vendor management program so they can catch up on work without stressing the budget. Others are lending their expertise on saving a few dollars.
RediCarpet suggests breaking away from the recent trends of using costly hardwood flooring and installing carpet in all areas except for those that might get wet.
“That one thing alone will provide a substantial savings to their flooring expense budgets,” Melton said.
In June, Lowe’s launched its Lowe’s For Pro Job Site to help vendors and service providers better do their jobs while minimizing contact with residents and apartment staff. Plumbers, electricians and others can use augmented video chats to conduct virtual home visits with customers.
Through the visit, the technician can understand a customer’s issue, quickly troubleshoot and possibly solve the problem without entering the home, Matthews said.
“Think about the maintenance technician that can video chat with a resident, diagnose what's wrong, be able to solve the problem, or at least show up with all the tools to get the job done the first time, and not have to enter the unit more than once to solve for the problem,” he said.
The program is free through Oct. 31 for Lowe’s Pro Loyalty members, as well as companies enrolled in RealPage’s spend management services.
Also, Lowe’s began offering a 60-day, no interest and no pay incentives and an immediate $1,000 limit to help RealPage members work through new projects.
Putting a plan in place to save money and ensure
Good planning and innovation became paramount early on as the pandemic spread.
Peterson noted that many of HD Supply’s customers began focusing on the safety of their employees, residents and communities, which has led to an increase in PPE and cleaning products. HD Supply quickly enacted next day delivery on many products so its customers could react as quickly as possible to changing needs.
“We have quickly adapted all aspects of our operations to ensure we remain well-positioned to serve our customers throughout this pandemic,” Peterson said.
Soon after RediCarpet was deemed an essential service, the company formed a task force to ensure it was in compliance federal, state and local guidelines in the 31 markets it serves.
Technology assisting in communication, administration
Jones said mobile applications, sourcing a new supply chain, creating contact-free deliveries and curbside services are other ways that vendors and suppliers are helping apartments manage spending through difficult times.
Because much of the day-to-day work must be done with social distancing in mind, technology is playing a big role in communication.
Melton said the industry has learned to adapt to distanced communication through platforms like Webex, Zoom, Microsoft Teams and House Party.
Technology continues to assist in the administrative process to keep processes fluid as well. Property managers are using tools like online catalogs, e-invoicing and electronic payments to improve efficiency and purchasing power.
“RealPage had definitely seen more interest in mobile applications, electronic invoice and payment processing, as well as invoice approvals and payments to work effectively with remote staff,” Jones said.
Tips for property managers to stay nimble
Property managers can also arm themselves by building a stable of qualified multifamily vendors, managing insurance requirements and ensuring compliance with access to RealPage’s more than 20,000 vendors.
Jones offered a few tips so property managers can stay nimble from sourcing through vendor management.
“One, find vendors quickly and limit your risk,” she said. “Keep control overspend with online catalogs and remote ordering. Gain efficiencies with electronic delivery of invoices and payments. Analyze inventory and supplies accurately with real time data. Stay current with insurance and minimize property and vendor risk.”
Apartment operators can learn more about managing spending when it matters most with RealPage’s Spend Management solution.