Rethinking the ‘Leasing Office’

I remember seeing a post on LinkedIn years ago where an apartment owner was setting the goal to get to a staffing model where he would have one on-site employee per every 1000 apartment homes. 

I also remember thinking he was crazy.  Turns out he was just prescient.

The traditional staffing model of 1:100 is clearly on the way out.  With ever increasing cost burdens of taxes and insurance, the high turnover rate and the lack of available workforce right now, it simply has to.  Operators’ margins are thin enough as it is and the increasing cost of maintaining the current staffing level, let alone the cost associated with a 50% average turnover ratio, are forcing them to compress further each year.  It is an unsustainable relationship.

Fortunately, the PropTech industry has come forward with several solutions to the problem.  Virtual tours, online leasing processes, self service work orders, resident portals, smart home technology, IOT and Artificial Intelligence (just to name a few) are all driving a trend towards the automation of the traditional leasing office.  We now have the ability to run a property completely remotely if we so desire and during the beginning of the pandemic of 2020, several operators found themselves doing exactly that whether they wanted to or not. 

But as we come out of the pandemic lock down, the real question we should be asking is not ‘Can we do it?’  It’s ‘Should we do it?

The evidence is clear that our guests want to be able to do business on their terms.  They want to be able to interact with the community digitally.  At any time of day.  Through a smart device and not by walking through the office doors that are only unlocked between 9am – 5 pm.  They want flexibility.  Automating all of the functions of the Leasing Office should both deliver savings for the operator and the experience our residents desire, right?  In theory at least, yes.

But I believe there is also an inherent risk in executing on this strategy – the commoditization of your product.  A completely digitized experience leads directly to a commoditization of your community.  Commodities are easy to abandon or switch between.  Homes are not.

So we face a conundrum – how do we leverage the efficiency that automation and artificial intelligence deliver without sacrificing our ability to build a sense of community?

Because here is the thing, the evidence is also clear that guests want to feel a part of something.  They do not want a box, they want a home.  In a recent study conducted by the Data Science team at RealPage on multiple years’ worth of data generated by JTurner Research and their ORA Score, a clear correlation between online reputation and both resident retention and revenue performance was identified.  To summarize the study (available here) for every point of improvement a property experiences in their ORA score, it correlates to a 3bps improvement in revenue.   Reputation and guest experience matter and you do not build either through a completely digital interaction. 

So what are we to do with this conundrum? 

My opinion is it is time to start rethinking the purpose/function of the onsite team itself.

Back when I was running multifamily properties and during my time leading corporate housing operations, I became known as the ‘Disney Guy’.  My goal was to create as close a ‘Disney Experience’ in my operations as possible.

  • I had all of my manager’s read ‘The Disney Way
  • We referred to all of our residents as our ‘Guests’.  Prospects were also ‘Prospective Guests’
  • We did not have units, we had ‘Homes’
  • I even had an executive (who was also a resident) question the landscaping expense at one of my communities because it was starting to look too good.

So it should not come as a surprise that I think we should take a page out of the Disney playbook.  When automation eliminated the need for paper tickets related to the Fast Pass, Disney did not immediately move to lowering staffing levels, they thought about how those Cast Members could enhance the Disney Guest Experience in other ways.  Then when resources became excessive, they moved to lower their Cast Member count per guest.  Look for the opportunity to enhance first, make cuts second.

The multifamily industry has the opportunity to change the game.  We need to convert the ‘Leasing Office’ into the ‘Resident Service Center’.  Our on-site staff should not be concerned with filling the building but rather keeping the resident base serviced.  If we are able to automate & centralize the majority of the customer acquisition process, the entry of a work order, the monthly rent payment and other mundane interactions, our on-site teams are freed up to focus on servicing the needs/desires of the guests we currently have.  Improving reputation, retention and ultimately, profitability.  This should lead to a staffing model that is lower than 1:100 while also meeting the desires of both our resident base around service and ownership expectations around cost.

We need to convert the ‘Leasing Office’ into the ‘Resident Service Center’

In order to make this wildly successful though, we need to do things differently.  Very differently.  We need to hire for different talent.  We need to set different expectations with both our residents and our teams.  We need to compensate differently.  The physical structure of the office needs to be rethought.  We need a well thought out and integrated self-service resident platform to empower residents to actually self-service.  We need to change the game but now is a great time to do just that.  Change the game.

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