The worsening labor shortage across the U.S., coupled with growing consumer demand for tech-enabled processes, is driving multifamily operators to embrace technology that automates and streamlines the leasing process.
From multifamily-specific CRMs and AI leasing assistants to self-guided tours and automated income validation, proptech is taking over tasks that historically have been the responsibility of leasing staff.
The industry is moving—at a fairly fast pace—toward “self-leasing,” according to John Helm, a partner at RET Ventures, a venture capital firm focused primarily on multifamily and single-family rental technology. Self-leasing expands on the popularity of self-guided tours and allows prospective residents to drive the entire leasing process through user-friendly proptech.
“You can book a hotel room, check-in and check-out, all without interacting with another person—you can do it all online,” Helm says. “We’re getting close to that in multifamily. There are a number of tech solutions and tools that, when combined, enable self-leasing.”
Tech solves labor shortage
One of the biggest challenges facing multifamily owners today is staffing and retaining employees. Pre-pandemic data from the National Apartment Association (NAA) shows the property management industry was suffering from a turnover rate of 32.7 percent, a figure significantly higher than the average turnover rate across all other industries. Industry experts estimate that number is now in the range of more than 70 percent, primarily due to pandemic-related pressures.
NAA, in partnership with proptech firm AppFolio, recently surveyed apartment owners and operators to determine their top business priorities. The survey found that HR-related issues continue to plague the industry, with 74 percent of respondents selecting staffing and recruitment as one of their top three challenges and 50 percent ranking it as their primary challenge.
The past 18 months have been particularly difficult for those who work in the multifamily sector. “Property management teams have done nothing but adapt and overcome one new issue after the other over the past 18 months,” says Nat Kunes, senior vice president of investment management at AppFolio.
Adopting proptech can makes leasing agents and property managers’ jobs much easier and allow them to focus on the purpose-driven aspects of their jobs, Kunes notes. Many time-consuming data entry tasks can be solved with the automation embedded into the best proptech tools available today.
“These tools also help optimize workflow management, making collaborating with team members easy and keeping everything running smoothly,” he says. “Instead of getting caught up in the minutiae of remembering to follow up with leads or input invoices, tools like AppFolio can augment property management teams’ skill sets, allowing them to do more with less.”
For example, United Dominion Realty Trust (UDR), a Colorado-based multifamily REIT, experienced reduced headcount of roughly 40 percent compared to early 2018 staffing levels after rolling out its next-generation operating platform. Currently, 18 of its 21 markets and more than 85 percent of its roughly 55,000 apartment units are running on the new platform.
“Our innovative next-generation operating platform continues to drive a wholesale change in how we approach our customers and run our business,” said Tom Toomey, chairman and CEO of UDR, during the REIT’s second quarter 2021 earnings call.
The widespread introduction of automated self-touring and resident interfaces across UDR’s communities has driven average headcount reductions of approximately 40 percent compared to early 2018 staffing levels, primarily through natural attrition, according to the REIT.
To provide some hard numbers, UDR had one associate for every 31 apartments, including corporate employees, at the beginning of 2018. Today, the firm has one associate for every 42 apartments and sees a path to achieving one associate for every 44 units in the coming quarters, according to Mike Lacy, senior vice president of property operations for UDR.
Meeting resident expectations
UDR’s adoption of various technologies has established a permanent reduction in the REIT’s cost structure by helping to neutralize wage inflation and allowing employees to manage its communities more efficiently.
By integrating technology tools throughout the leasing process, UDR and other multifamily owners have seen impacts beyond staffing and cost reductions. For example, after UDR implemented its new tech platform three years ago, its resident satisfaction scores have improved by 24 percent, according to Lacy.
While improved satisfaction scores can be attributed to better customer service, they’re also driven by giving tenants the tech-enabled processes they want and expect.
“Today, especially after the initial wave of COVID last spring that saw such rapid technology adoption, residents have a desire for tech-forward offerings in every aspect of their life, including leasing,” Kunes says. “They expect more service from property managers, and technology helps them provide that service without adding additional staffing.”
The pandemic sped up the digital transformation that was already underway in the multifamily sector. Technology became a key way that owners and operators could communicate with potential renters as they moved from lead to resident.
At the beginning of the pandemic, multifamily investment firm Trion Properties began utilizing AppFolio’s virtual assistant, Lisa, to streamline its leasing process and make it much easier for the Los Angeles-based firm to keep track of prospects and lead sources, according to Jorge Velasquez, director of property management at Trion Properties.
“Lisa—AppFolio’s virtual assistant tool—allows us to take multiple inquiries at once at any time of the day or night and pre-screens to ensure genuine communication,” Velasquez says. “Through leveraging a variety of technologies, we are now able to offer multiple options to learn more about a property on various platforms from the palm of someone’s hand. This further allows our on-site staff to focus on the human elements and best serve prospective and existing residents.”