by Donald Davidoff | Dec 2, 2016 12:00:00 AM
November is gone, and that’s a good thing for pricing people in multifamily housing. This was my 16th November in our industry, and I honestly can’t think of a single one that felt good. This is the time of year when seasonality is working against us as winter is literally coming. Budget dreams of any sequential rent or occupancy growth are now meeting the reality that growth in the 4th quarter rarely, if ever, happens.
Even when budgets allow for some reduction in occupancy and/or rents, I find that operators still typically feel a pit in their stomachs as they see sequential declines. Intellectually, we know that spring will come and rates and occupancies will rise; they always do. Yet emotionally, we can’t help but envision the straight-line trend to hell. Compounding things this year is the growing sense of a cyclical downturn. Maybe it will be a soft landing or maybe (God forbid) a hard landing, but it will be a landing of some sort. All benchmarks show rent growth abating and political issues both at home and abroad give a sense that there’s more downside risk than upside.
One of my favorite “self-help sayings” has always been, “Don’t curse the wind; set a better sail!” So what can we do to set a better sail? Here’s a few ideas:
1. Let’s at least stop using pessimistic metrics.
If your operational reports have a “future occupancy” or “occupancy trend” metric, eliminate them. These are the metrics that look at current occupancy along with scheduled move-outs and then project a future occupancy (usually 30 or 7 days hence) as if NO FURTHER LEASING will occur. It’s the ultimate “worst case scenario.” It’s so pessimistic as to be unrealistic; yet it’s great at scaring any well-intentioned operator into demoralizing her staff and/or implementing panic pricing tactics. There’s an old joke that a man goes to his doctor to complain about constant headaches. When the doctor asks if the man does anything that might cause these headaches, the man admits that he regularly bangs his head against the wall. So the doc tells him to stop banging his head against the wall. Let’s stop banging our heads against the wall. (For a very humorous take on a method for dealing with fears, check this out.)
2. Use hold times as a lever.
If you have some unleased vacant units piling up, extending hold times are often a better option than lowering rents or adding concessions. However, most site operators won’t extend hold times without knowing if senior management encourages it. Of course, make sure associates know the threshold at which they need to revert back to normal hold times. (For a serious take on hold times, check this out.)
3. Re-visit your sales model and training.
Is it a behavioral change program parsed out over months or just a training event? Does it incorporate the realities of a Zero Moment of Truth (ZMOT) world? Is it truly centered on helping prospects (“always be helping”) or more of an old school “always be closing” philosophy? Does it expect more “hard sales skills” than is realistic for an employment pool typically making salaries in the 40s or 50s?
4. Re-visit your marketing stack.
Is your website performing as well as it should? Does the data show you should cull some ILS…or invest more? What’s your event marketing plan for 2017? What are you doing about reputation management and other social media channels? Now is a good time to plan initiatives for 2017 that focus on BOTH lead generation and lead consideration phases.
5. Investigate partners who are true force multipliers.
I’m talking about things like call centers, CRM software and email re-marketing.
And if all else fails, grab a really warm blanket and a good single malt. That should keep you warm until spring comes and the tide lifts all our boats!