Tech Causes Evolution, Not Revolution, In Multifamily
Although people are living online to a greater extent nowadays, they still need a place to sleep, entertain, eat and play. This means multifamily is better insulated from tech-triggered demand shocks like the one that has impacted retail. (One tech trend impacts both multifamily and retail: Property managers have had to come up with innovative new package management systems to accommodate the tenfold increase in volume in the past 10 years.)
Evolution, Not Revolution
While the rise of e-commerce has diminished the need for brick-and-mortar storefronts, technology’s impact on multifamily has been less dramatic. Rather than elimination or overhaul, multifamily is undergoing a process of refinement, adaptation and integration, according to RADCO CEO Norman Radow (above).
Tenants are both driving and responding to paradigm shifts engendered by technology. When evaluating their housing options, Radow said, “it’s becoming patently obvious that tenants are more sophisticated and informed by the online research and vetting they’ve done before visiting.”
Adapting To Mobile's Increasing Prominence
Radow also said that with tremendous advances in cellphones’ capabilities and speeds, people who stumble onto properties on the street, or drive past them in the car, have all the information they want — reviews, specs, availability, customizability — at their fingertips.
This puts new pressure on marketers to ensure their online image best reflects their assets’ strong points. Their efforts see greater returns (most notably increases in conversion rates) as potential residents have already reviewed much of their potential place’s package and have found it to their liking. They have theoretically conducted similar reconnaissance on competing properties, and culled some from the list.
So what is left? Radow said making the space resonate with tenants on an emotional level when they walk in the door can be the difference between getting the signature or ceding it to a competitor.
Leveraging Social Networks
The power of the social network is also becoming increasingly apparent, Radow said. The buzz, how people talk about a property, should be carefully monitored and mined for insights.
If there is a hot-button issue that keeps reappearing, or something a home is missing, people will talk or write about it. Social media mentions can be a great indicator of what a property is doing well and what needs to change.
Social media is also a powerful influencer. Radow recently hired a reputation management marketing director, who tracks on a whiteboard with magnets and notes how a property is performing for the entire marketing team to see.
“Ten years ago, this position would have been unheard of, we think we’re ahead of the curve by adding it,” Radow said. “We're now able to determine if that 10% rent growth or higher renewal rate is correlated with positive social media mentions."
He then tries to replicate that success. Many are actively reaching out with review requests to cultivate a property's online reputation, but fewer are taking advantage of the valuable feedback reviews afford.
Contract Flexibility Is Key
All the above takes place on arguably the single most significant modern amenity — the internet. Connectivity is more important than ever, and, according to Radow, the cost, availability and flexibility of the packages offered greatly impact tenant satisfaction and retention.
Tenants hate being tied down. They want to be accommodated by service providers with shorter and more flexible terms.
“Traditional two-year contracts are viewed as cumbersome,” Radow said. “We’re unbundling these offerings and creating competition between providers so tenants have choices. We want to force providers to act more like nimble tech companies and less like monopolistic utilities.”
He has a building in which tenants paid an average of $800/month, which is on the more affordable side as housing goes. Yet, when offered the option of upgrading to a higher speed, 15% of the tenants agreed to shell out the extra cash in just two months.
That is because home internet is often viewed as a tool, enabling residents to work from home, rather than toy, for streaming video.
Technology has been blamed for the modern, high-stress, 24/7 work culture. Letting people work virtually can give them some breathing room, some necessary separation from the office.
Developments like these show that “disruptive” is the wrong word to apply to technology in multifamily.
“If you look at retail, it’s either dying or going through a revolution due to e-commerce, and we can’t even anticipate the ramifications or comprehend the radical change that’s coming in the next five years,” Radow said.
“In multifamily, there’s an evolution — in marketing, in connected systems, in infrastructure, but you’ve still got the same four walls, bathroom, microwave, thermostat and router.”