Are We Looking at Property Differentiation the Wrong Way?
by Trachelle Spencer | Jul 2, 2019 12:00:00 AM
I recently read - with interest - the coverage of NMHC's recent spring Board of Directors meeting in Chicago. What really caught my eye was a talk entitled "Seven Ways to Succeed in the Future of Real Estate," given by Dror Poleg, the founder of Rethinking.RE. The presentation discussed how technology is redefining real estate, shifting value from the physical space to the services provided.
In this environment, the logic goes, the customer, rather than the property, increasingly becomes the asset of your business. Space becomes a service and competitors become your partners. From this radical view of an increasingly inverted world, the idea of the customer becoming the asset resonated with me, based on my own experience in the multifamily industry.
Why residents matter more than buildings
Over the years I've run pricing and revenue management for companies whose portfolios were primarily made up of older assets. Due to the age of those buildings, they often lacked clubhouses and traditional amenities. I remember how site staff would look to the amenities of competitor properties, often requesting fitness centers, for example, so that they could compete.
I looked at their needs differently. Their demographics were made up mainly of first-time renters or those who were paid hourly. While a gym or new amenities may have been nice, their residents needed help with their kids in before- and after-school programs or during summer vacation.Their kids needed help with homework. They needed reliable transportation to get back and forth to work. Many had not grown up in the US and needed help understanding American culture and business practices. Many needed assistance with their personal finances. All of these were a lot more important to them than a fancy workout facility.
We have argued frequently in these pages that communities and operators should spend more time understanding resident and prospect needs, and how the combination of neighborhood and property address them. The idea of treating your resident as the real asset takes this to a new level.
I remember thinking that rather than building a gym or a clubhouse, what would it have cost to arrange for tutors, auto mechanics, accountants or even doctors and dentists to come to the property? How could we as operators ease their pain points or simply do something to make their lives better?
Rethink your value proposition, attract and retain more residents
I was recently brainstorming with a client in Hawaii as we were trying to discover their residents’ needs. The operator explained that many of their residents don't have furniture because they relocate from the mainland and choose not to ship their items. This need created an opportunity for the operator to provide a service. The team decided they would form partnerships with local furniture retailers to get resident discounts or even gift cards when they needed a look and lease.
I'm sure there are many other examples of ways in which operators have refined their service offers based on their understanding of the residents' needs. Please share your own experiences in the comments below! When communities understand and address the pain points of their residents, not only can they provide more relevant offers for prospects, they can foster a greater sense of community.
When we do as Dror Poleg suggested and see our customer as our asset, residents increasingly feel like management is genuinely looking out for their best interests. It's hard to see how that doesn't result in greater loyalty at renewal time.