Strategies to Succeed in 2023's Changing Multifamily Market

As the multifamily industry faces numerous challenges in 2023, operators and owners are seeking effective strategies to navigate the changing landscape.

In a recent webinar, experts, Ben Pleat of Cobu and Lisa Yeh of Sentral, discussed the key hurdles and opportunities for multifamily owners and operators in the current market. 

This blog post summarizes the insights shared during the webinar, highlighting the significance of resident engagement, new management approaches, and leveraging technology to drive value and overcome challenges.

Here's an overview:

• Strategy 1: Understand the Impact of Economic Cycles on Multifamily Buildings
• Strategy 2: Prioritize Resident Engagement for Enhanced Resident Retention
• Strategy 3: Create a Sense of Belonging to Boost Financial Performance
• Strategy 4: Integrate Community Building into Your Management Strategies
• Strategy 5: Listen, Adapt, and Exceed Resident Expectations
• Strategy 6: Think Beyond Apartments and Leases
• Strategy 7: Leverage Innovation and Technology for Personalized Resident Experiences
• Strategy 8: Cultivate Brand Loyalty and Differentiation
• Strategy 9: Explore New Revenue Streams

Strategy 1: Understand the Impact of Economic Cycles on Multifamily Buildings

The economic cycle plays a crucial role in the multifamily sector, with different building classes experiencing varying effects. Historically, during economic slowdowns, Class A buildings are initially affected, followed by Class B and C buildings. 

As renters seek to save money, there is a shift towards more affordable housing options. This trend results in decreased occupancy and rent growth for operators, while expenses continue to rise due to cost inflation. The combination of rising costs and declining revenue poses significant challenges for operators in delivering value to owners. 

Strategy 2: Prioritize Resident Engagement for Enhanced Resident Retention

With the rental market favoring tenants, it is essential for operators to prioritize resident engagement and retention. This customer-centric approach is crucial in an environment where tenants have more rental options than ever.

Rather than implementing budget cuts, operators are concentrating on improving resident experiences through personalized events and fostering stronger connections with residents. By creating a sense of community and providing exceptional customer service, operators can get higher retention rates and improved financial results for the property.

Strategy 3: Create a Sense of Belonging to Boost Financial Performance

Community building initiatives play a pivotal role in overcoming the challenges of the multifamily industry. Operators must engage with residents at every touchpoint, from prospects to long-term tenants. Authenticity and personalization are key in creating connections and fostering a sense of belonging. 

By organizing tailored events, utilizing technology platforms, and embracing local culture, operators can provide residents with authentic experiences that resonate with them. Creating a vibrant community not only boosts resident satisfaction but also improves financial performance.

Strategy 4: Integrate Community Building into Your Management Strategies

To effectively incorporate community building into their management strategies, multifamily owners and operators should prioritize resident-centric approaches over cost-driven ones. While efficiency and cost control are important, driving revenue growth and creating exceptional resident experiences should take precedence. 

Operators should leverage their expertise to optimize revenue, enhance resident satisfaction, and outperform the competition. Embracing technology and innovation, such as resident apps that consolidate information and provide seamless interactions, can further enhance community building efforts.

Strategy 5: Listen, Adapt, and Exceed Resident Expectations

Multifamily owners and operators should prioritize listening and learning from their communities, recognizing the unique needs and preferences of each location. By doing so, they can quickly adapt to meet residents' expectations and identify opportunities for improvement. 

This proactive approach contrasts with reactive strategies that often rely on feedback received through platforms like Yelp or Google. By actively parsing data and engaging with residents face-to-face, you can understand what changes are necessary and identify future possibilities.

Strategy 6: Think Beyond Apartments and Leases

The multifamily industry is evolving, requiring operators to move beyond the traditional approach of providing apartments and leases. Today's residents seek additional value and personalized experiences. 

Operators should adapt by offering services and benefits that go beyond the four walls of an apartment. This includes providing fast and reliable Wi-Fi, engaging with residents through technology platforms, and bundling services and programs that create value for residents.

Strategy 7: Leverage Innovation and Technology for Personalized Resident Experiences

Innovation and technology play a crucial role in driving community building and enhancing the resident experience. As we mentioned, the implementation of resident apps that consolidate information and facilitate interactions can improve communication and access to services. Leveraging technology to provide personalized discounts, facilitate resident interactions, and offer unique experiences can strengthen community bonds and attract new residents.

The multifamily industry will experience increased openness to technology adoption in the coming years. However, the need for reliable and multifunctional solutions that are simple and integrated will encourage widespread adoption. 

Strategy 8: Cultivate Brand Loyalty and Differentiation

As multifamily evolves into a consumer industry, the role of branding becomes crucial. There are parallels with the hospitality industry, where brands like Marriott and Kimpton have successfully cultivated loyalty through frequent touchpoints and curated experiences. 

In contrast, traditional multifamily leases, typically lasting 12 months, offer limited opportunities for building brand loyalty. Soon, the multifamily industry will shift toward offering more flexible stay options, catering to consumers' changing needs, and offering more opportunities for brand building. 

That means you need as many touch points as possible in order to be present throughout the resident journey. Additionally, curated amenities and services create a distinct identify for your brand. Short-term rentals demonstrate an understanding and commitment to convenience, while thoughtful amenities show residents that you understand what it takes to make their lives comfortable. Doing so helps them distinguish your brand from the competition, creating a lasting impression.

Strategy 9: Explore New Revenue Streams

Short-term rentals are one of the biggest opportunities in the multifamily industry. By offering flexible stay options, property owners can generate additional revenue and create a buffer against declining rental trends. Moreover, exploring revenue-sharing agreements with various vendors and leveraging community resources can open up new avenues for revenue growth. Multifamily operators should think outside the box, embrace innovation, and seek alternative ways of generating income.

Conclusion

Navigating the changing multifamily landscape in 2023 requires multifamily operators and owners to prioritize resident engagement, community building, technology adoption, branding, and exploring new revenue sources. By implementing these strategies and staying ahead of the curve, multifamily operators and owners can navigate the changing landscape, drive value, and thrive in 2023 and beyond.