The Demand Solutions Blog

5 Ways Smart Multifamily Communities Generate Higher Returns

Posted by Dom Beveridge on August 04, 2020

Over the last year or so, as proptech has exploded, showering the multifamily industry with new and exciting technology, it has become harder to understand the return on technology implementations. As we wrote earlier this year in our 20 for ‘20 white paper, an ever-growing vendor population is competing to deliver ostensibly the same benefits to multifamily communities and companies. To make good decisions, operators have had to sharpen their ability to estimate financial benefits.

The problem gets harder still when a technology offers numerous sources of potential upside. Smart home technology is just such a case, with the combination of access control, thermostats and leak detection providing numerous ways to improve operations and customer experience. The challenge is to identify a credible and measurable source of upside, and figure out whether or not the investment makes sense.     

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Topics: Multifamily Trends, Multifamily Technology, COVID-19

18 Months That Shook Multifamily Leasing (And What’s Next)

Posted by Dom Beveridge on July 28, 2020

Several months ago I started to write a post about the extraordinary changes to leasing processes that we had seen over the previous 12 months. The post, which was to be called “12 months that shook multifamily leasing” went on hold as COVID-19 took over our industry discourse. Few would have predicted the breakneck acceleration of automated leasing that has taken place in the first half of 2020. It has caused us at D2 to discuss extensively and to speculate on what this all means for the future of leasing. I will share some of our thoughts in this post.

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Topics: Multifamily Technology, COVID-19

Two Multifamily Misconceptions About Smart Home Technology

Posted by Dom Beveridge on July 22, 2020

Now I'll admit that it's hard to remember what was going on in the days before the COVID-19 lockdown disrupted our industry, but stuff was going on. New technologies were already transforming operating models before any lockdown started. Forward-thinking operators were already reaping the benefits, removing friction from the day-to-day lives of their residents and site teams, and creating new automation opportunities.

In our March 2020 "20 for '20" white paper, we noted the remarkable acceleration in the industry's acceptance and adoption of self-show in the previous 12 months. As social distancing measures have forced operators to find ways to show apartments without human interaction, adoption has accelerated more quickly than anyone anticipated.

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Topics: Multifamily Trends, Multifamily Technology, COVID-19

Thinking Differently About Lease Trade-Outs in Today's Market

Posted by Trachelle Spencer on July 14, 2020

Would you try to build a puzzle with just one piece? You already know the answer is no, so why would you try to make pricing decisions based on just one data point? With puzzles, the picture doesn't start to take shape until you have joined multiple pieces together. The same is true with your pricing decisions.

Too often, we see companies making pricing adjustments solely based on prior rents, often referred to as "trade-outs." When you focus on just one data point (the "trade-out"), you fail to see the full picture. In some cases, users over-ride their pricing and revenue management (PRM) system to protect the trade-out. In this post, I'll explain why that's riskier than you may realize, especially in today’s market.

To be clear, I am not saying that prior rents are not important. They are: I have often referred to them as the "canary in the coal mine," but they don't tell the full story and should not be used exclusively to determine the success of pricing. 

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Topics: Revenue Management, Leasing, COVID-19

How to Win Big in a Downturn with Revenue Management

Posted by Donald Davidoff on July 07, 2020

Watching pricing performance since the downturn started and reflecting on all the things we've done with our clients over the past three months reminds me of a key lesson I learned about pricing and revenue management (PRM) in the 2002-03 and 2008-09 recessions. The opportunity to outperform competitors with PRM is actually GREATER in a downturn than in growth conditions.

That may sound a bit odd until you consider a few realities of PRM and recessions. For example, we should recognize the psychological bias that PRM systems are there to help increase rents. In reality, they exist to maximize rental revenue. Most of the time, that means controlling the pace of rent increase, but there are times when maximizing revenue means lowering rents to grow or protect occupancy. Not surprisingly, a recession is one of those times.

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Topics: Revenue Management, COVID-19

Multifamily's BI Evolution (Not Revolution)

Posted by Dom Beveridge on June 30, 2020

When we come to write the history of the changes that coronavirus forced upon multifamily, there will be plenty to say about its impact on technology. With social distancing virtualizing property operations, demand for proptech has skyrocketed, for example (as we will discuss on this blog in the next few weeks). But as companies have accommodated work from home, another, more traditional technology has come to the fore: Business Intelligence (BI).

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Topics: BI & Analytics, Multifamily Technology, COVID-19

How Multifamily Pricing Systems are Handling this Downturn

Posted by Dom Beveridge on June 23, 2020

Over the last few months, we at D2 have been developing and sharing insight about the state of the market and the ways that companies are managing it. As the world has lurched from crisis to crisis, we have held weekly discussions to figure out what's going on. Last week was no exception, although we focused on an area that's close to our hearts: pricing and revenue management (PRM) systems.  

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Topics: Revenue Management, COVID-19

Is Your Fall Revenue Management Playbook Ready?

Posted by Donald Davidoff on June 01, 2020

Each week we have been summarizing insights from our weekly "downturn" round table conversations. This week we share a few highlights of our most recent call (May 27), as we prepare for a webinar on the pressing issue of how to prepare for fall 2020. If you haven't done so, please register for our Webinar "The Gathering Storm - Revenue Management Planning for Fall 2020," which took place June 3, at noon.

On our most recent call, we continued what is now an almost 2-month long trend as participants reported consistent improvement in leasing:

  • [Denver based] Last week's leasing was fantastic. It's been building for a few weeks. This week started off strong.
  • Saw a significant shift in leasing over the past two weeks in Orlando with 26 leases. We think the announcement about Disney and Disney Springs reopening may have shifted the tide. 

However, urban coastal markets continue to lag in leasing more than the rest of the nation. They are improving, as indicated by one operator sharing, "Leasing has been great over the past two weeks, but we are still down 29% on year-to-date applications. We haven't quite caught up, but if we can [sustain this] pace going forward, that will definitely be nice."

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Topics: Revenue Management, COVID-19

Multifamily Downturn Q&A - May 26th, 2020

Posted by Donald Davidoff on May 26, 2020

Each week our "downturn" roundtable enables us to discuss current pricing and revenue management (PRM) issues with some of the most experienced PRM practitioners in the industry. Each week we summarize the most recent insights. 

Below we summarize the audience responses to prompts (all answers are anonymous) on our most recent call (May 20) along with some information we re-shared from RealPage. If you have different insights or questions that you would like us to address in the coming weeks, please leave them in the comments or contact us through the site.

This week we opened up with a discussion about some key metrics we saw in a RealPage blog:

  • Despite the pandemic, occupancy April remained well above the prior ten-year average and slightly above April 2019. Strong February and March occupancies helped with that as April 2020 occupancy was below March 2020. Normally April occupancy is higher than March
  • Through mid-April, canceled move-outs were roughly double the historical norm. We look forward to future reports to see how long this tailwind sustains
  • Retention rates in April were at least 400bps higher than normal (at 57.9%)
  • All the above was at the expense of rent growth. Effective asking rents went from >2.5% YOY to 1.0%, the largest drop we've seen in our entire history in the industry
  • The focus on asking rents can be misleading: executed effective rents were down 4.5% YOY, and likely will drop further

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Topics: Revenue Management, COVID-19

3 Reasons Multifamily Needs to Prepare for September 1

Posted by Donald Davidoff on May 20, 2020

During these first few months of the COVID-19 crisis, the two things that multifamily operators are most concerned about are rent collections and leasing volumes. So far the results have been more than a little bit interesting (and to many people counter-intuitive).

On the leasing side, we saw a massive drop in demand in the first three weeks. Overall, leasing was down more than 50%, and some urban coastal markets were down 80-90%. Since then, however, leasing has recovered such that most secondary and tertiary markets are now at or above prior year volume while the urban coastal markets are generally within 20-25% of prior year volumes.

Meanwhile, rent collections were a topic of great angst, first for April 1; then, when April numbers came in generally off only 4-6 points from prior year, there was a great concern that May 1 could be a disaster. Based on data from NMHC, May appears to be coming in slightly better than April.

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Topics: Revenue Management, COVID-19