Originally Published On Proptech Today
Between 2021 and 2023, a total of 1,221,552 new apartment units were built, with an additional 671,953 units expected to be completed in 2024. This brings the total to nearly 2 million new apartments across the nation, according to *RentCafe and **RealPage. This surge in construction surpasses any other four-year period in history, with the closest comparison being from 2017 to 2020, which added 1.5 million units. In total, over the past eight years, 3.4 million units have been added to the apartment supply.
This tsunami of new supply is changing the apartment industry for the better.
New apartment supply has been driving the much-needed innovation and technological advancement in property management operations in recent years. Through the collaboration of technology and property management professionals, rapid advancements are emerging, leading to increased or stabilized revenue despite it being one of the most challenging markets in history. The integration of tech and teams allows property management to focus on enhancing resident experiences and addressing previous shortcomings. Additionally, these solutions enable more time for training and development, mitigating the impact of staffing shortages on employees, residents, and communities. Overall, technology-driven centralization and automation are restructuring on-site roles, streamlining operations, and bolstering revenue generation.
A case study of the resilience and revenue that technology, centralization, automation, specialization bring to multifamily portfolios, see UDR.
UDR has long been a tech-savvy, proactive operator that consistently performs in all markets. ***UDR in March of 2024 paid shareholders their 206th consecutive quarterly dividend, and what’s more, dividends were up 1.2% over the last quarter. UDR’s strategic response to elevated supply and the challenges that come with it resulted in increased revenue and an average occupancy of 97.2% in January. UDR an established trailblazer in the multifamily space and it’s strategies have paid off. According to their website, **** over half of their nearly 60K units have smart home packages with expandable smart options and 70% of their communities have package lockers to start. They highlight other tech based amenities and offerings like EV car chargers, Community-wide internet offering 1gig and Self-Guided tours. Look even closer at UDR’s Careers page, and you can expect to see openings for Centralized Sales Specialist, Centralized Renewals Specialist and Resident Service Specialist, Centralized Application and Lease Specialist..by now you get the picture. UDR is special but they are by no means alone. You’ll find strategic similarities with other multifamily operators such as ZRS, Knightvest, BH Management. Proptech practitioners have the stability and revenue advantage in their markets.
Centralization, Automation, and Specialization are no longer just industry buzzwords. It’s The Present and The Future.
Consider how leasing an apartment, or completing a service request could look with the technology available today……..You could have a centralized leasing specialist schedule a tour guiding prospects through the community via video chat, show them 2 or 3 apartments accessed through smart locks, talk them through the application process from the comfort of leasing agent’s home at 7:00am or 7:00pm. Alternatively, the prospect could schedule and guide themselves, with the centralized leasing specialist popping in on an IPAD in the unit to answer questions and guide them through the application process. Visibility with self-guided tours and smart home technology allows you track the path and progress of prospects engaging with them virtually in the process.
A service request is delivered via app to a centralized team of service technicians, and the closest technician responds. The resident isn’t home, but the technician can gain access utilizing the smart lock and quickly finds the issue. They access the shop on-site via smart lock, gather the supplies needed, and completes the service request. The app notifies the resident that the service request has been completed.
What’s the urgency?
Advancement in Proptech is restructuring multifamily operations to support the industry’s growth. Its contributions fill the gaps in occupancy, service, staffing, and skills needed to achieve NOI. However, adoption and implementation is a timely matter with Indeed showing an estimated 15k multifamily job openings in March 2024 alone and another estimated 20K in jobs created by the 2024 new supply there simply won’t be enough skilled professionals to run the properties if operations largely stay status quo. This is made even more troubling by the average employee turnover rate of 33% in the multifamily industry and many employees having only a few months to a year of experience in their current role.
Without embracing technology-driven solutions, the multifamily industry risks falling short in meeting the demands of the growing market. As new units will be hitting submarkets in 2024 at a rate never before seen, multifamily owners and operators will endure increasing pressure to act. Technology and teams will enact strategies that respond and rise above the wave.
If you would like to learn more about centralized or shared services and the technology that support these strategies, feel free to reach out to me at
shampton@assetnoi.com
*https://www.rentcafe.com/blog/rental-market/market-snapshots/new-apartment-construction/
**https://www.realpage.com/analytics/2024-apartment-supply-tops-2023-records/#:~:text=Posted%20January%2015%2C%202024%20As%20a%20result%2C,past%20that%20record%20volume%20by%20about%2050%.
***https://www.investing.com/news/stock-market-news/udr-announces-dividends-for-common-and-preferred-stock-93CH-3338794
****https://www.udr.com/technology-advantages/