ATLANTA Treading Deep Water Probably no market presents management companies with more challenges than Atlanta. Its occupancy rate lingers among the lowest nationwide, effective rents are still headed downward, and additional product continues to pour into the marketplace. In this sort of environment, there is very little wiggle room on rents. Most of the best overall performers have effective rents that surpass the rates at their competitors by only the slimmest of margins, and some of the top revenue producers actually report rent positioning a little below the market norm. To achieve an overall performance premium in Atlanta, above-average occupancy is necessary.
Post Properties Customer Satisfaction Most of the REITs operating in Atlanta – and they are nearly all there on some basis – are commanding revenue premiums around 2 percent to 3 percent over the results for direct competitors in the marketplace. The group of companies with moderately above-average performances includes Post Properties, Atlanta’s biggest player, though achievement varies notably within different segments of the company’s portfolio.
Post is struggling to gain momentum with its newer urban core developments that stretch the affordability reach of some renter prospects. “It’s an intensely competitive leasing environment at the high price points in and around the Midtown and Buckhead markets, reflecting an abundance of top-end rental units as well as numerous condominium options,” say Tom Wilkes, president of Post’s management group.
In contrast, the company is doing better with its suburban projects, most which were built during the 1980s. These projects are sustaining significant occupancy advantages and slight rent premiums over direct competitors.
According to Wilkes, it is Post’s quality product and service that draws renter prospects to its projects. To keep the company focused on meeting customer needs, it has been conducting resident satisfaction surveys for more than a decade. Every resident is contacted at least once during the course of a year. “We’re proud to say that overall customer satisfaction scores are now at a three-year high,” Wilkes reports.
Satisfied residents have allowed Post to cut its turnover rate in Atlanta during the past year, despite the fact that the metro’s home sales volume was the highest nationwide. “We’ve also seen that some of the residents we lost to competitors that offered bigger rent concessions a year ago actually have come back to Post communities when their leases came up for renewal,” he adds.
Post also has tweaked employee recognition programs in order to reward personnel doing a good job in an environment that presents greater challenges. The company’s “Moving On Up Club” acknowledges property performance improvements measured on a month-over-month basis. “In the past, we’ve placed more emphasis on year-over-year results, but today’s conditions make it important to track movement toward recovery in smaller steps,” Wilkes says.
Gables Residential Property Trust Brand Strategy While it’s difficult to gain a notable edge in Atlanta, one company has done just that. roperties managed by Gables Residential Property Trust generate revenue premiums on average near 6 percent over the typical incomes produced by key competitors, with the bulk of this advantage resulting from higher occupancy. Among nearly two dozen Gables-managed projects examined for this analysis, only three had occupancy rates below the average for direct competitors – and one of those was a new development still in the initial leasing stage.
The company began efforts to brand customer service four years ago, says Marvin Banks, CFO at Gables. He believes the company’s new service-oriented mission, “Taking Care of the Way People Live,” is paying off now that the marketplace has grown more competitive.
Another area that is sometimes overlooked when discussing customer service goals is technology. The company invested $6 million in a Web-based information system, which was rolled out in 2001 and early 2002, that provides real-time data on the performance of the Gables portfolio. This system allows the company to adjust pricing daily, while decreasing the amount of time that on-site employees spend on administrative duties and paperwork.
“The improved technology gives our people the tools to make good decisions,” Banks says. “They now have more time to spend with customers, and they do. Training our maintenance staff to remain on top of customer service initiatives also has been important, because they are on the front line dealing with customer issues,” he adds.
The company also takes advantage of economies of scale by focusing operations in what they call established premium neighborhoods – concentrating development and ownership in a desirable area rather than spreading properties throughout a metro area. “We believe that marketing one-off assets underutilizes our strengths,” Banks states.
He further cites corporate culture as a significant influence on the bottom line. “Gables wants to be the employer of choice for the best apartment personnel in the market,” Banks says, “and our six-week paid sabbatical every five years for an associate with more than 10 years of service sets us apart.”