As Rents Fall Operational Efficiency Becomes More Critical

Apartment occupancies are starting to deteriorate as the COVID-19 fueled economic crisis wears on. A recent survey of Zillow listings showed that 30.4% of rental listings on the service featured concessions, compared to 16.2% of listings in February and 12.5% last July.

Other data providers are showing similar issues in the market. RealPage says that rents dropped an average of 1% in the second quarter, which was the first decline of that type in nearly a decade.

As apartment operators navigate occupancy concerns and collection issues, saving money becomes even more critical. They can find real savings onsite.

In a recent blog post, RealPage’s Tim Blackwell said that operators don’t have to make massive cuts to enjoy noticeable savings. He writes that applying spend management practices and accounting efficiencies can help apartment firms save thousands of dollars.

An excellent start to the process is to benchmark expenses. That helps operators understand the purchasing efficiency of the property. Another way to achieve savings is to automate the purchasing process and ensure consistent vendor pricing, according to Blackwell. 

While purchasing and benchmarking expenses can help corral costs, apartment owners are facing another pandemic-related challenge. With telework now commonplace, many residents are home during the day, which, in theory, could increase costs.

Enertiv, a commercial real estate technology company, has analyzed maintenance expense data from office and multifamily housing units to show the cost of the coronavirus shutdown. It found that apartment buildings were not as burdened as one might expect.

“There was concern initially that while office buildings emptied out, multifamily buildings would be crushed by higher occupancy than what operators are used to and systems are designed for,” Enertiv said. “This turned out to be wrong. It appears that instead of staying in multifamily units, many New Yorkers left the city during the stay-at-home order.”

Across the CRE spectrum, owners are open to technology that helps their business run more efficiently. Building Engines released a report called The CRE Technology Gap, which explored the current relationship between technology and real estate ownership. In that report, more than half of real estate operators surveyed wanted to implement mor

e technology, and 84% of owners believed that technology could help their business meet all of their operational goals. Fifty-one percent of owners said that the right technology could streamline operations, while 49% said that it could help make decisions quicker and 48% said that they could more effectively respond to occupant needs.