For multifamily companies, IoT technologies can unlock a variety of financial benefits, driving both revenue and cost performance improvements. Previously in this blog series, we discussed the cost side of the ledger, focusing on the combination of fixed and variable costs that characterize multifamily operations. Not every efficiency translates directly into dollars saved, but some do. And, as we will explain in this post, the tangible savings can be significant.
The critical element that operators must consider is the way that smart building technologies save their associates' time. Removing keys from multifamily operations removes time-consuming activities and puts hours back into the site team's day. That allows teams to focus on more value-adding activities. It also allows operators to consider more radical changes to their operating models.
For a number of years, the multifamily industry has been changing the way it handles leasing. Digitally-native prospects increasingly prefer to do most of their research online before viewing an apartment, rather than relying on leasing agents to inform them. Operators have been working to provide the elements of a technology-enabled self-serve leasing experience. Smart access has emerged as a foundational technology in enabling prospects to conduct their own property tours.
When technology can control access to the building, public areas, and every unit in a community, operators have complete flexibility to issue temporary access for tours that are tailored for the individual prospect. It's a better experience, and it reduces the amount of time that leasing agents have to spend touring properties with their prospects. That time-saving opens up some exciting opportunities.
With tour volumes drastically reduced, leasing teams can be organized differently, especially for companies with geographically concentrated portfolios. Neighboring sister properties, for example, can begin to centralize some leasing functions, deploying agents to a cluster rather than to an individual property. This arrangement can not only lower costs but also improve associate engagement.
First, let's look at the potential impact on costs, particularly the speed with which cost savings can pay for the technology required to deliver them. In the example below, a 300-unit property is implementing access control to support a self-service leasing process. The lower workload enables the property to operate with a smaller on-site team.
It is increasingly common that portfolios with properties close together will share staff between properties wherever possible, breaking the traditional model of FTEs always being allocated to individual properties. For simplicity, we have assumed that the technology has enabled the property to operate with one less full-time equivalent (FTE) than previously.
In the example, the one-off costs of equipment and installation and the ongoing software costs are applied to the annual reduction in FTE cost to establish how long it will take for the investment to pay for itself. The model shows a headcount reduction of a single FTE achieves payback on the smart access implementation in just over three years at a five-year IRR of 33.3%.
Of course, there are other considerations besides access control for companies attempting to centralize leasing operations. Lead-nurturing and call center operations are obvious, perennial challenges for which companies are increasingly finding technological solutions. But nothing has a greater impact on the physical processes involved in leasing than building and unit access automation.
As mentioned above, "team optimization" is not all about saving money: operators who are achieving success in transforming leasing find that it benefits associate engagement. When associates can spend their time closing leases rather than touring properties, they are spending more of their time focused on a higher-value task.
Multifamily communities are a "fixed capacity" product, meaning that the amount of units you can sell is constrained by the number of available units. If the staffing model requires that individual associates be allocated to individual properties, those individuals will experience fluctuating demand for their services. When a community's exposure is low, it needs few leases, and hence effort from its leasing team. When exposure is high, the opposite is true.
Operators can flatten these peaks and troughs by allocating agents to whichever properties have the highest exposure. That makes leasing teams more productive and should ultimately make it easier to manage exposure. The experience of being a leasing team member also improves as agents' time is spent closing leases wherever there is the greatest need. And in an environment where it is becoming harder and harder to hire and retain good team members, employee engagement should be a top priority for successful operators.
Smart building technology delivers a wide range of financial benefits for multifamily owners and operators. From cost efficiencies to improved customer experience, a strategic investment in the right technology solution can positively impact both the cost and revenue sides of the ledger.
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Learn more about the potential impact that smart technology has on the cost side of the ledger and how it can positively affect the efficiency of multifamily operations.