The Demand Solutions Blog

Hitting the Slopes: Why Lease Expirations Matter at Year-End

Posted by Donald Davidoff on Dec 3, 2019 3:44:00 PM

As we head into the winter months, it’s normal to think about slopes - especially if you live in Denver, as I do.  Denver is famous, amongst other things, for both skiing and multifamily leadership, and the “slopes” that we find ourselves discussing with multifamily leaders at this time of year are the profiles that describe a property’s lease expirations.

Lease expiration management (LEM) is particularly timely now as we lease December/January move-ins, soon moving on to February (which many are already sending renewal offers for) and then March. Now is the time where we get to move expirations out of undesirable expiration months into more desirable months. 

Miss your targets in the next few months, and you’ll have to wait another year to try to fix that pain. It should be simple enough, right? We know there’s seasonality, so we know what good and bad months for expirations are. All we need to do is stop signing leases with bad expirations and only sign leases with good expirations. As my good friend and former colleague now at RealPage, Rich Hughes would say, “Done and done,” right?

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Topics: multi-family housing, pricing and revenue management, Renewals

CoStar Shoots for the STRs - Big News for Multifamily?

Posted by Dom Beveridge on Oct 8, 2019 8:20:46 AM

I must admit, last week's acquisition of Smith Travel Research (STR) by the CoStar group took me by surprise. And it wasn't just me - few observers of either the hospitality or multifamily industries expected it. As the dust settles after a seismic move, let's take a moment to think about some of the possible implications of this acquisition.

First, this is a big acquisition. Although not quite at the same dizzying heights of the 2014 Apartments.com takeover, $450m for a data company (i.e., not a product like an ILS that drives prospects to its customers) is extraordinary. But STR is no ordinary data company. It is not an exaggeration to say that STR is the foundation upon which property analytics are built in the global lodging industry. For decades, STR has been the gold standard for property performance and property underwriting. Nobody plays in this critical niche at the same level in multifamily.

For CoStar, who now have the habit of entering new markets with a strategy of going very big, the strategy makes perfect sense. Overnight they have become the uncontested, dominant force in hotel analytics. The merger on this scale creates many exciting opportunities, including a couple of potentially important ones for multifamily.

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Topics: Pricing, multi-family housing, Short-Term Rentals

Ten Questions Asset Managers Should Ask About Pricing

Posted by Dom Beveridge on Sep 10, 2019 8:26:00 AM

Recently we have written extensively on the skills that are needed to run an effective pricing and revenue management (PRM) organization.  We normally take the perspective of an organization looking to bolster its PRM capabilities - something that we feel companies should focus on after a decade of growth in multifamily.  But there is one important stakeholder group whose perspective we have not addressed as directly as the others: asset management.  

Through our industry connections and our growing roster of institutional ownership clients, we have come to pay more attention to the asset management perspective over the last year or so.  With regard to revenue management, asset managers have the often unenviable task of overseeing the revenue management decision-making of third parties, usually either management companies or software vendors.

In either case, an asset manager has to understand enough about market conditions and strategy to be able to evaluate a property’s pricing tactics.  They must resist getting into the weeds, of which there are many in the case of PRM, but still provide oversight. With this problem in mind, we recommend asking ten questions that will help you understand where your PRM opportunities might be.

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Topics: Pricing, Revenue Management, multi-family housing, pricing and revenue management

The 5 Top Attributes for Successful Revenue Managers

Posted by Donald Davidoff on Aug 6, 2019 8:18:00 AM

Pricing and Revenue Management (PRM) has been in mass-adoption in multifamily for more than a decade.  During that time, an industry talent pool has developed around the core technologies that companies use to manage pricing.  The systems are sophisticated, enabling better decision-making and returns at companies that have been successful in incorporating them into their business processes.

Yet our experience tells us that some companies integrate PRM systems and processes into their businesses more effectively than others. While companies may use the same PRM software, many don't get the same returns as other companies that use it. Much depends on the human skills that companies deploy to ensure that the system is configured and operating in the way that it should be.

Given our depth of talent and experience in PRM, clients frequently ask us what they should look for in a good pricing and revenue manager.  Our industry often places a heavy emphasis on multifamily experience when recruiting new associates, often for reasons.  However, there are compelling reasons to apply different rules to PRM recruits (the discipline of PRM came from different industries, like hospitality and airlines, after all). While awareness of multifamily operations can undoubtedly be helpful, it honestly is not the most important qualification for a successful revenue manager.

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Topics: multi-family housing, pricing and revenue management, business intelligence, Multifamily Trends

7 Reasons Why There Ain’t Nothing Like a Downturn

Posted by Donald Davidoff on Jul 30, 2019 12:07:11 PM

A few weeks ago, I wrote about some of the core skills of Pricing and Revenue Management (PRM) and how those skills have diminished in the industry talent pool during the last decade. As I explained - using Warren Buffett’s playful metaphor about tides and skinny-dipping - it’s relatively easy to deliver growth in a generally growing market. Skillful, difference-making PRM professionals are adept in delivering upside even in less favorable market conditions.

Nobody likes downturns, but having been in multifamily PRM for more than 20 years, I can attest to the stress-test that they impose on PRM capabilities and practitioners. If your pricing managers haven’t been pricing for at least 10 years, then they have never dealt with a softening market. That’s true whether they’re internal employees, associates of your third-party fee manager or serve on the staff on a pricing services team that is offered by your pricing software vendor.

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Topics: multi-family housing, Multifamily Trends, Future

Are We Looking at Property Differentiation the Wrong Way?

Posted by Trachelle Spencer on Jul 2, 2019 9:00:00 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.

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Topics: property management, apartments, apartment operations, multi-family housing

Floor Plans: Why Too Much Choice Can Be Worse Than Too Little

Posted by Trachelle Spencer on May 1, 2019 9:45:09 AM

A few weeks ago we discussed the experience of leasing up big projects and the importance of setting up unit type groupings in the pricing & revenue management (PRM) system. In that article I noted that too many operators neglect unit type setup, creating categories that make no more sense to a prospect than a shoe store that grouped all of its shoes by size alone.

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Topics: Revenue Management, multi-family housing

What Would You Do? Tips to Reduce Staff Turnover

Posted by Donald Davidoff on Nov 27, 2018 10:40:00 AM

In our new series, we’ll be tackling common and frequently asked questions from operators and operator executives in the multi-family housing industry.  

Ask a multifamily operations-focused executive what their biggest concerns are, and it likely won’t take long for the topic of staffing—and by extension, turnover—to  come up. High turnover rates have a number of negative implications for operators, including hiring costs, lost productivity, lower sales results and more. 

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Topics: multi-family housing, leasing associates, Multifamily Trends

Allowing Short-term Rentals in Multi-family Buildings: The Benefits and the Risks Based on Real-world Data.

Posted by Donald Davidoff on Sep 27, 2018 9:16:13 AM

Just yesterday, Pillow Homes released a white paper I authored, “Allowing Short-term Rentals in Multi-family Buildings: The Benefits and the Risks Based on Real-world Data.” Though in full disclosure I was compensated for my work, I am particularly proud of this piece of analysis as it’s the first time I’m aware of any comprehensive case study of what really happens when buildings actively allow residents to sublet their homes out for short-term rentals (STRs).

The paper was made possible by data collected on the Pillow Homes platform and the courtesy of two management teams of Denver multi-family communities allowing me to interview them to bring their experiences into the analysis along with the “hard” numbers. The study was made all the more interesting as one of the communities was a stabilized property and the other is going through lease-up, thus giving different perspectives from different operating imperatives.

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Topics: multi-family housing, Leasing Performance, Short-Term Rentals

5 Tips for Effective Multifamily Email Marketing

Posted by Doug Davidoff on Mar 31, 2017 5:23:32 PM

The possibilities with email marketing have come a long way.  Greater functionality and the plethora of automated email marketing platforms represent an apartment marketer’s fantasyland.  However, just because more is possible, doesn’t mean multifamily operators are using email marketing more effectively.

Research we conducted a couple years ago (that we are in the process of currently updating) shows that very few operators are effectively using emails as a marketing tactic. In fact, surprisingly few use it at all, so “Tip #0” is that you should have an organized email re-marketing campaign.

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Topics: multi-family housing, apartment marketing, marketing programs