SAN DIEGO Maximizing Opportunities With individual investors controlling a much larger share of the apartment stock in San Diego than in Atlanta or Houston, relatively few companies have sizable portfolios to demonstrate successes that clearly can be attributed to management and marketing skills. Within the group, the two best performers are Archstone-Smith and BRE Properties. These companies each own or manage some 3,200 units to 3,500 units that on average earn revenues roughly 7 percent over the norm for projects of similar age in the same neighborhoods.
Archstone-Smith Yield Management Archstone-Smith has been among the first companies in the apartment industry to put yield management software into widespread use, having deployed a Web-enabled pricing system across all of its garden apartment communities during 2001 and early 2002. This tool has raised the bar for performance across the company, allowing instantaneous price adjustments based on shifts in demand and product availability, says Dana Hamilton, Archstone-Smith’s executive vice president for national operations.
Furthermore, the system is forward-looking. It can anticipate conditions at various lease expiration times. “Sometimes you have to buy future occupancy to make sure that you won’t have too many units available at times when renter traffic is sluggish,” she explains.
While pricing is significant, Hamilton says that staffing has just as much impact on overall performance. “People will always be incredibly important in the industry,” she says. “You have to recruit the right personnel, provide them sufficient training, and create the type of workplace that leads to employee retention.”
BRE Properties Transferring Talent Frank McDowell, president and CEO at BRE Properties, partially credits premium performances that the company now registers in San Diego and several other metros nationwide to some hard lessons the company learned operating in the San Francisco Bay area’s roller-coaster market during the past few years.
“We make sure to maximize the results available from our talented personnel by placing the best people at the properties that make the biggest contributions to net operating income,” McDowell reports. “Also, we make sure our product is offered at a fair price without concessions. We’ve found that prospects looking for big upfront giveaways often are focused on price for a reason. Leasing to that group leads to higher turnover.”
BRE looks for where revenue can be boosted significantly by spending a little more money. Enhancing curb appeal – especially in a softening market where efforts to limit costs mean that some owners are not staying on top of property appearance – is one way an increased expenditure can end up yielding more dollars in the long run, says McDowell.
“It’s all about people and pricing,” says Archstone-Smith’s Hamilton, neatly summing up the opinions voiced at today’s top performing management companies.
These companies have in place well defined programs to promote customer service, measure resident satisfaction, encourage employee performance, and maximize rent achievement. Thus, their revenues exceed the market norm, whether operating in the best of times or the worst.
–Greg Willett is the vice president of research products at M/PF Research in Dallas.