The multifamily rental market has been experiencing stagnation and even a slight decline in some regions year over year (YOY).
This trend poses challenges for owners, property managers, and real estate investors as they all strive to navigate an uncertain market.
With summer moving season here, we’re investigating how technology can help us remain successful in less-than-ideal market conditions.
The State of Multifamily Rents YOY
National multifamily rents have decreased by 0.8 percent since this time last year, but not yet hitting pre-pandemic numbers. This marks the slowest growth rate in the past decade. So why is it slowing down so much?
Economic Uncertainty: It’s no secret that we’re experiencing economic instability. This is making consumers more cautious in their spending and hesitant to commit to long-term rental agreements.
Overbuilding: Some regions are building too many new apartments, causing an excess of inventory in the market and suppressing rent growth.
Changing Preferences: In the past few years, the shift towards remote work has meant that many people moved from the city to suburbs or rural areas. This shift has impacted the demand for residential properties in urban areas.
Challenges in a Stagnant Market
In a stagnant market, asset managers, leasing teams, and brokers will all face certain challenges, and they’ll need to adjust their strategies to deal with them.
Resident Retention
Cash flow and occupancy rates are priorities. High resident turnover means lost rental income, high maintenance costs, and spending your budget to market.
The cost of turning over one apartment unit can reach into the thousands. This includes cleaning, repairs, and marketing expenses. The longer a unit remains vacant, the more it’ll impact your bottom line.
More Competition
The summer moving season often brings more competition as potential residents look for new homes. In major cities like New York and Los Angeles, more apartments become available during these months. Property managers suddenly feel the pressure to offer competitive prices and incentives.
And if you fail to adapt? Prepare to lose out on prospective residents to other properties that are more proactive and tech-friendly.
Shifting Demographics and Preferences
Demographic shifts and changing preferences also pose challenges. Many younger renters, such as millennials and Generation Z, value modern conveniences and tech-enabled experiences. A study by Rent.com found that 82% of renters want a rental home with at least one smart home feature, which could include keyless entry, smart thermostats, and high-speed internet access.
Rising Operational Costs
As property managers try to keep their buildings occupied, rising operational costs such as property taxes, insurance, and maintenance expenses can erode profit margins. Homeowners insurance has gone up 19.1% since 2018, and property taxes climbed 3.6% from 2022 to 2023.
Given these specific challenges, property managers, asset managers, and brokers need to adopt innovative strategies that enhance the resident experience and increase competitiveness.
Leveraging Technology in Real Estate for Competitive Advantage
In these difficult rental market conditions, it’s time to look to technology to help you beat the competition in real estate. Tech has already transformed the real estate industry in property management, resident satisfaction, and market competitiveness.
With VTS, the rental real estate world is your oyster. Want to give digital tours to prospective tenants outside of your market area? How about streamlining the leasing process to give tenants more flexibility? VTS will help you reach a broader audience, including those moving from other cities or states.
When it comes to smart home offerings, having a branded resident app powered by VTS Activate provides the modern tech-enabled conveniences today’s residents want:
- Give residents easy access to the building lobby, their apartment, shared spaces, and amenities with a few clicks.
- Make package delivery and pick-up easy with in-app notifications, and you’ve got some happy residents who can’t wait to renew their lease.
- Enable residents to reserve amenities like gyms, rooftop lounges, and media rooms through an app branded to your building. That’s living a life of luxury.
Artificial intelligence (AI) and machine learning can help offer personalized experiences to your tenants, like tailored recommendations and automated responses to common questions. They’ll always feel taken care of without much extra effort on your end.
And there are more ways property managers benefit from using technology to its fullest. VTS Data will keep you up-to-speed on market trends, so you’re always one step ahead of the competition.
Strategies for Renewing Residents With Technology
To stay competitive, you need solid strategies to get your residents to renew.
One way to do this is through automated communications using a building app. You’ll keep residents informed about events, maintenance updates, and neighborhood news, which all foster a sense of community.
You can also send out surveys to gather resident insights, and then use them to make necessary changes. Your tenants will appreciate that you listened and adjusted accordingly. They’ll also love the ability to submit virtual maintenance requests through an app, where they’ll get faster response times and track the status of repairs, providing the transparency residents expect when it comes to quality of life in their homes.
Another strategy is to offer incentives for renewals, like discounted rent or amenity credits. Some properties have introduced loyalty programs that reward residents for their tenure, providing benefits like priority access to amenities, parking discounts, or exclusive event invitations. VTS Activate can help you facilitate such programs to get your tenants to stick around.
By focusing on resident satisfaction, property managers can increase renewal rates and build lasting relationships with their residents.
Beating the Competition in the Summer Moving Season
Prepare to use technology for the summer moving season. You need to be able to show off your property's features and amenities to stand out, so here are some things you can do to get noticed:
- Incorporate virtual staging to give a modern and appealing view of your available units, attracting prospective residents online.
- Have an interactive website with floor plans and 3D virtual tours to make the property more accessible.
- Create targeted social media campaigns to reach your ideal residents and showcase the property's amenities and features.
- Provide a seamless moving and onboarding experience for new residents to further differentiate your property.
- Offer virtual lease signings, online move-in checklists, and digital welcome packets to show new tenants what a smooth transition looks like.
Leverage Technology for Long-Term Success
As the real estate market faces stagnation or decline in multifamily rents, leveraging technology provides a long-term solution to retain and attract residents.
VTS Activate offers cutting-edge technology to help you achieve these goals and win in a stagnant market. With VTS Activate, you can allow residents to manage their living experiences from the palm of their hands, and get data-driven insights to optimize your property's performance and increase resident satisfaction.
Now is the time to invest in digital tools and innovative strategies. Schedule a demo today to get started. You’ll improve your resident experience and position your property for success in the years to come.
