With COVID-19 having shaken up multifamily (along with everything else), industry professionals are turning to market analytics to find the right balance in their marketing and pricing strategies. The resulting strategies have sometimes involved pressing the brakes one moment and the accelerator the next.
Multifamily housing’s bumpy trek through the pandemic has put some marketing strategies on hold in a market that now favors renters. With the economy re-emerging, many industry stakeholders are choosing to offset flat rents and concessions in exchange for strong occupancy. But others are starting discussions about ramping up marketing and pricing strategies to increase rents. As always, different markets (and market analytics data) dictate different strategies.
Today’s apartment dwellers stuck in place for a time have now begun to look at moving, a trend supported by the latest transaction data from RealPage as reflected in its Market Analytics data. Apartment leasing remains strong, recovering from a dip in the second half of March. Guest card creation and property website traffic recently actually tracked above 2019, indicating that renters who had resolved to find a new place before the pandemic are getting serious about moving ahead now.
Accordingly, the needle is moving a bit downwards on renewals after sky-high retention during the early weeks of the COVID-19 pandemic. Renewals were down 2% through the first two weeks of June.
Rent collections, a big concern as businesses shuttered and unemployment changed sharply, have been surprisingly positive for the industry.
Yet data is also telling some multifamily properties they will have to work a little harder on their rent rolls to reach higher levels of occupancy for the remainder of the year.
“If you are a renter, it’s a great time to be in the market,” says Laurie Baker, who is president and CEO of CamdenLiving. “We’re seeing concessions. New leases are down, and that’s not been the case for many, many years.”
The ‘new normal’ means new strategies
In a recent RealPage webcast, the majority of viewers said they are keeping pricing flat, but 35% are testing the waters for increases. None was cutting renewal rates.
RealPage Deputy Economist Jay Parsons says that despite turbulent times, the apartment industry is learning a lot about itself.
“A new normal isn’t necessarily a bad thing, of course,” he notes. “Sure, there are some things we’ve been forced to change, like sanitation practices and social distancing rules. But as an industry, we’ve also learned a lot that has made us better.”
One is the realization that apartment operators can use technology to rent apartments without seeing prospects in person. Some renters, Parsons says, actually prefer it this way. And of course, it’s much less time-intensive for property staff. So in this sense, the pandemic has uncovered a new area of opportunity.
Another is a renewed appreciation for business intelligence in illustrating how markets react to change. Marketers have altered strategies based on data to respond to market conditions with an eye not only in the short-term but also the future.
Spending a little more on promotion
CamdenLiving’s strategy has been to hold the line on rates, which is a reason why the portfolio is at 95% occupancy and 92% pre-leases, Laurie Baker says. Renewals in April were strong at 67%, followed by 66% in May. “It was the right thing to do,” she adds, and CamdenLiving is feeling confident about its position.
“We’re now at a point where we feel really good about our strong occupancy offsetting the fact that we’re not getting any increases on our renewals,” she says. “We’ll take a look at markets where there might be opportunity for increases, and we’ll gingerly approach that.”
With an uptick in traffic in May and June, ad spending has become more appealing. President and CEO Maria Banks says traffic has increased enough that AMLI Property Management Co. is putting resources back into social media and internet listing services.
“Early in the pandemic we didn’t think that there was enough traffic to warrant this extra spend in marketing,” she says. “But now that we’ve seen traffic picking up over the last month, we’ve started re-implementing some of these activities.”
Market analytics at Karoi
Using marketing to drive summer sales and position for strong fall occupancy is on the mind of Tammy Freiling, executive vice president at Kairoi Residential.
Freiling envisions geo-fencing strategies playing a role as usual, but they likely will evolve into targeting prospect renters where they live rather than where they work, shop or socialize, she says. If a property needs a boost in occupancy, marketing dollars will be allocated accordingly.
“We’ll make those adjustments, but we don’t feel like this is the time to pull back at all in our marketing spend,” Freiling says. “In fact, we will see increases where occupancy is not where we want it to be.”
Learn more about driving higher occupancy, rents and NOI at your properties by leveraging the eye-opening data provided by market analytics. Just click this link: RealPage Market Analytics.
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