Back To Old School: Tech Can’t Replace Service And Community Amid Distress

Artificial intelligence is encroaching on more everyday processes, and property management is no exception.

But the real key to retaining tenants and running properties is a return to old-school, service-focused property management, according to those overseeing formerly distressed buildings and properties pulling some of the highest rents in Houston.

Faced with financial distress, demand for the best amenities and a slew of new technology, success takes expertise and a willingness to adapt, panelists at Bisnow’s Houston Property Management Summit said Thursday.

“We as an industry have to really start thinking differently,” CBRE Houston Property Management Market Leader Lauren Kelch said. “We need to stop thinking about buildings, real estate … as a product, and start shifting that mindset to the service.” 

Since interest rates shot up and distress led to a slew of foreclosures and sales, managers of recapitalized properties have had to step in to turn tenant experiences around, panelists at the event at Omni Houston Galleria said. 

“Distress is a great opportunity,” Hines Managing Director Adam Rose said. 

If a building is acquired by someone with capital for upgrades, there is low-hanging fruit from a property management perspective, he said. Tenants have often lived through a tough time, Rose said. 

“You can probably make very significant improvements just by [doing] the basic things that were not being done before,” he said. “When you call the management office, does someone pick up? Does somebody respond? In a lot of cases, those things are not being done.” 

DML Capital has recently acquired “Class-A-minus” office buildings in highly amenitized areas, co-founder Anil Mohammed said. Those include 4265 San Felipe, which was built in 1983.

The firm is repositioning the building by bringing in new offerings, moving away from food, shopping and other options that already exist in the nearby River Oaks District mixed-use development, he said. 

“The first thing we'll do is, we'll eliminate those services from the building and make room for amenities that are a little bit more interesting,” Mohammed said.

That could include putting greens, patio decks and event programming, he said. To further integrate the building with the community, management can bring in local restaurants to sample and sell dishes to the office tenants, Mohammed said. 

Connecting the users of properties with a community is imperative, Kelch said. An apartment tenant is 8% more likely to renew their lease if they have made one friendship or connection at their property, according to a RealPage study.

“Don’t do any sort of programming or tenant engagement — don’t even get me started on ice cream socials — unless community is at the center,” Kelch said. 

One survey found that 74% of residents at Autry Park said community events make a difference in them wanting to stay at the property, Moody Rambin Executive Vice President of Property Management Shane Cawood said. Autry Park is a mixed-use development along Allen Parkway with two Hanover multifamily properties.

Property management strategies at Hanover Autry Park are helping the complex achieve some of the highest apartment rents in Texas, he said.

 The property has a studio apartment starting at $2,428 a month, including a mandatory amenity charge, according to its website. That’s more than the average three-bedroom apartment in Houston. Studios in Houston average about $1,085 per month.

Managers of the retail and office properties at Autry Park regularly communicate with the multifamily managers to make sure they are curating the ideal environment for residents, Cawood said.

“[They’re] finding out what the residents are saying about the restaurants, the food there, the noise levels, whatever it is, finding solutions and ways to improve that,’” he said. “Giving the tenants access to general managers, direct numbers. Going out of their way to make it worth the highest rents.” 

And while artificial intelligence and new technology are worming their way into the property management process — allowing tenants to pay rents, find a new home and submit maintenance requests from their phones — personal relationships are paramount, Kelch said.

“Tech handles the transaction, and people handle the relationship,” she said.

The value of implementing data and technology will never outweigh word-of-mouth marketing and experience, which are worth the investment, Kelch said. 

“Someone was challenging me, ‘What’s the return on experience?’” Kelch said. “I got frustrated and said ‘Well, what’s the return on your mom?’”