With the major markets of Texas adding thousands of new apartments every year, multifamily management firms are increasingly relying on technology to accelerate leasing activity, grow renewal rates and handle requests from tenants — all in the name of keeping their properties competitive and their investor clients happy.
As beneficiaries of strong job and population growth throughout this cycle, Dallas-Fort Worth (DFW), Houston and Austin have all watched their multifamily supply levels increase. According to CoStar Group, DFW, a national leader in apartment development, has added more than 20,000 units per year in each of the last three years.
Houston has also seen its supply of multifamily product grow over the past several years as natural population growth has worked to offset hiring slumps brought on by depressed energy prices. Austin and San Antonio are also facing demand for more housing via the strong population growth occurring throughout the region.
Multifamily supply growth means that renters have more options on where to live and can afford to be more selective, not only with regard to rental rates, but also in terms of services. To the latter point, management professionals have taken on an added element of customer service that can sometimes make the difference between a newly executed lease or a missed one, or between a terminated lease and a renewed one.
As the roles of property managers and leasing agents have risen in importance, these professionals have increasingly turned to different technological platforms and channels to boost occupancy and renewal rates.
“All of our properties are heavily reliant on technology for marketing,” says Angelique Goodnough, executive vice president at Austin-based Roscoe Property Management (RPM), which manages about 30,000 units in Texas. “From ensuring a property ranks highly in searches to marketing on social media to offering activation programs at the community, it’s all about connecting with residents on an ongoing basis.”
Goodnough adds that software programs that track the flow of revenue and which provide managers with market data on competitive rental rates are also becoming more important in the day-to-day facets of the job. Algorithm-based platforms like YieldStar and LRO, which were developed by Richardson, Texas-based RealPage, track occupancy and rental rates at competing properties, enabling managers to use the data in real time to drive new leasing and renewal activity.
New Communication Forms
Gone are the days of stopping by the landlord’s office to sign a lease or drop off a check; much of the daily business of multifamily marketing and leasing today is conducted digitally.
To that end, managers must have a variety of technological platforms for an array of actions — collecting rent, conducting virtual tours, acknowledging and filing maintenance requests, furnishing real-time information on rents, promoting social events — and be versed in how these systems work. In addition, using these platforms to communicate directly with residents is also becoming increasingly important in terms of resident satisfaction.
“Research has shown that people will remain in their homes if they’re experiencing satisfaction and feeling like part of a community,” says Ricardo Rivas, principal at Houston-based Allied Orion Group. “In the multifamily world, communicating directly with tenants, whether through apps, texts or other types of management software, is a big part of achieving that satisfaction.”
Social media has long been a cornerstone of marketing campaigns in the digital era. But as competition for renters has intensified in the multifamily space, the use of Facebook, Instagram, Twitter and similar networks as vehicles for promoting social events has become more visible on the management side of the business.
Not only is social media critical to “activating” a community by informing residents about special events, but it’s also a means of appealing to prospective renters from beyond a property’s boundaries. Partnering with local retailers and restaurants via social media has become a very effective way of reaching new audiences and elevating a property’s reputation, sources say.
“We’ve really bought into co-marketing with other service providers in our area, whether they be hospitality, retail or restaurant,” says Goodnough of RPM. “It’s a very effective way of illustrating the lifestyle that comes with living at our property, plus it gives our residents access to premiums and discounts at special events. This makes the community more valuable to them beyond just their dwelling.”
Rivas of Allied Orion says his firm is equally sold on partnering with surrounding service providers, often bringing in food from local restaurants for residents to enjoy and sponsoring events at their venues. All of these practices help the property feel more like a community and not just a residence.
Information Overload
The fact that prospective residents have more ways of researching and learning about properties has also been a major driver of technological growth in the multifamily management business, says Kari Warren, executive vice president of operations at San Antonio-based Kairoi Residential. The firm manages about 7,800 units in Texas.
“In the past, prospective renters would have three to five sources of contact with a property,” says Warren. “Maybe they’d consult an apartment guide, do a drive-by or happen to know someone who lived there. Now, between Googling the property, reading reviews on a listing website and following it on social media, it’s more like 12 to 15 sources of contact.”
Roscoe Property Management was recently awarded management of the 3,500-unit B/K Multifamily portfolio, which includes Garden Gate in Plano (pictured above).
What this means, Warren says, is that if even one of those channels is inconsistent with a property’s brand and reputation, prospects will begin to question the entire property and inevitably look elsewhere. As such, multifamily managers must display an understanding of how marketing and technology work together.
“Management and maintenance, as well as marketing, have become much more challenging as technology has evolved,” she says. “It’s ever-changing, and to be successful, you not only have to understand the business, but also how technology intersects it. To that end, successful management requires a unique skill combination that not everybody has.”
Labor Concerns
In a field that requires an understanding of both the business and the sophisticated technology that governs daily operations — plus a unique personality type that is comfortable with social engagement — it’s not
shocking that labor issues have persisted in multifamily management during this cycle.
Furthermore, the national economy is fielding a 3.5 percent unemployment rate (as of early October), and that the Texas economy boasts the same rate. Most experienced candidates are employed and are seeing their wages and benefits rise as the supply of management professionals struggles to keep pace with demand.
“Finding the top people in the business is the No. 1 priority in the business today,” says Goodnough. “Just because 100 properties get built doesn’t mean that 100 top-notch staffers for every category appear with them. The labor shortage has caused salaries to increase, but the positive side of that is that more people are starting to see multifamily management as a career.”
According to the Bureau of Labor Statistics (BLS), as of May 2017, the median salary for all community association, property and real estate managers was $58,670. The BLS also projects that by 2026, the industry will have experienced 10 percent job growth over a 10-year period, suggesting that the supply of laborers may continue to lag behind demand and push wages higher.
“We’re definitely seeing wage inflation in the management business,” says Kim Radaker Bays, founder and principal of Southlake-based Exponential Property Group, which manages about 5,000 units in Texas. “There are applicants out there, but finding quality candidates is the challenge, and throwing money at the problem doesn’t necessarily get you the best people.”
Experience is always a plus, she says, but not necessarily a prerequisite to excelling at the job. Employees in the retail, restaurant and hospitality sectors often make good candidates because they are customer service-oriented, capable of multi-tasking and are accustomed to thinking on their feet to solve problems. In some cases, the closing of brick-and-mortar retail has pushed some workers toward multifamily management, particularly those who worked in home décor or hardware stores, she adds.
To combat the labor shortage, many multifamily management firms have established strong internal promotion and advancement programs to encourage new hires to stick around. These companies are also partnering with local trade schools and universities to educate emerging members of the workforce on the upshots of the profession and to tap into the talent pool at earlier stages.
Virginia Tech has become the leading university for graduates that are seeking careers in property management, sources say, although schools within the Texas A&M network have also begun to offer more programs in different sub-fields of real estate.
“Competition for talent in this business is strong across Texas, and particularly in markets that have a lot of new product,” says Warren of Kairoi. “Companies have to be focused on the teams they have now and show them career paths so they’re not jumping ship for an additional dollar an hour. The companies that are going to keep the best people are the ones that create the culture, including leadership and mentorship programs designed to bring in and keep the talent.”
— By Taylor Williams. This article first appeared in the November 2019 issue of Texas Real Estate Business magazine.