Heading into the last quarter of 2020, vacancy is expected to peak, and rents are expected to bottom out in the first quarter of next year, according to a CBRE apartment forecast. However, the multifamily industry is nothing if not resilient—from both a performance and an operational standpoint.
Quick Fix vs. Long-Term Flexibility
The COVID-19 pandemic struck during a time that, historically, is the most valuable: leasing season. This year, property managers were forced to swiftly assess costs, reallocate budget, and rapidly adopt technology to keep employees, prospects, and residents safe. Many of these were thought to be a short-term fix—just until “things get back to normal.”
For operators, “back to normal” isn’t happening. Multifamily operators need to deliver on customer expectations and team flexibility. The pandemic accelerated the industry’s “shift to digital” into warp speed. It’s time to move out of a “survival” mentality and into a deliberate, strategic framework for applying technology.
Investing in Value-Driven Technology
Technology mitigates market, people, process, and legal risks. It also creates more resilient assets by driving operational efficiencies, and helps managers make data-driven decisions to ensure you’re getting the most net operating income (NOI) out of your communities.
Using a value-driven framework to evaluate your technology focuses on long-term strategic benefits versus implementing band-aid solutions.
4 Ways Technology Drives NOI
If you want to know if your technology creates value, just ask, “Does my technology drive financial returns?” If you answered no, ask yourself, “What’s the point” and “where do I go from here?”
Knock, an intelligent front office platform and provider of value-driven technology wanted to know exactly how technology has generated value, so it recently analyzed data from its 300-plus multifamily customers.
The study resulted in the four ways operators evaluate and apply technology to generate value and drive NOI.
- Is it increasing economic occupancy?
- Is it replacing outdated or redundant tech?
- Is it optimizing marketing investment?
- Is it increasing team productivity?
But how does something like “productivity” actually translate into NOI?
Automation Drives Operational Efficiency
Operational efficiency often takes the form of increased leasing team productivity and is a major factor in driving NOI. Value-driven technology that applies automation can have an impact on productivity and responsiveness. Knock’s data science team wanted to investigate just how much and what effect it has on NOI.
Automation Drives Down Response Times for Prospects
They reviewed data from over 1 million prospects and found that faster response rates positively impact conversion rates.
When you dig into the findings you see that:
- Response times of less than an hour give leasing agents the highest likelihood of converting to a lease.
- Prospects are 32% less likely to convert if the response comes between one and six hours later. That jumps to 50% less likely if the response comes more than six hours later.
- Property managers that use Knock’s automation are able to significantly decrease response times, which leads to an average 20% improvement in lead-to-lease rates.
Tie the Tech to NOI
With this information about how automation helps increase team productivity, reduces response time, and improves lead-to-lease rates, you can determine the NOI impact of this value-driven technology. A 20% increase in the lead-to-lease conversion for an average portfolio of 5,000 units would add $780,000 annually to NOI (on average).
Applying a Value-Based Approach
As technology continues to play an essential role in building resilience into multifamily portfolios, applying a value-based methodology will ensure that investments made today positively impact NOI in the future. To learn more about value-driven technology in the multifamily industry, download The Value-Based Buying Guide.