Know the Issues
Consider these three factors before you centralize your all-star sellers into a single leasing office.
1. Small is tough. A property needs to be a certain size to have a centralized leasing operation. “Unless you really want to increase staffing, you need a jack-of-all-trades at small properties,” says Jerry Davis, senior vice president of property operations at Highlands Ranch, Colo.–based UDR. “In the 300- to 400-unit range, you have enough head count to specialize.”
2. Realize that there could be defections. Top leasing agents see their commissions grow and other responsibilities decline with centralized leasing. But those people stuck pushing paper or doing customer service won’t be as pleased. “Typically, their overall pay rate goes down because they’re not paid on commission,” Davis says. “Usually, you incur turnover with that. But when you rehire and explain what the position entails, [the new hires] are OK with it.”
3. Third-party management deals can get tricky. If you’re managing for others, it’s a lot tougher to make centralized leasing work. “The REITs have business models that can do that,” says Erin Ditto, senior vice president and director of the multifamily division at Greensboro, N.C.–based apartment owner and manager Bell Partners. “They own all of their properties. We would have [third-party] clients that would say, ‘I don’t want you leasing another owner’s building out of the office that you’re leasing my apartment building out of.’?”
Davis says centralized leasing has one other, under-the-radar advantage—it allows the company to keep its leasing agents. In the past, a competitor might have mystery-shopped a property, liked the leasing agent, and offered the individual a job.
“Instead of them having the opportunity to sell only 150 apartment homes, now they can make commission on 400 to 500 units, and their pay goes up $20,000 to $30,000 potentially. Nobody at that point can come in and steal my employee,” he says.
Follow the Leaders?
While the centralized leasing model seems to maximize the time and talents of a leasing staff, not everyone is pulling their best salespeople off their properties. “We have absolutely given thought to it,” Home Properties’ Darling says. “But we have not yet piloted anything like that.”
Home does have leasing consultants focused solely on sales at its bigger properties, but Darling is concerned that if leasing agents are suddenly selling multiple properties, they wouldn’t know the nuances of what they were selling and would lose their relationships with other office personnel. “We work hard to have a bridge between sales and service folks at the property,” Darling says. “I worry that bridge might be broken if we went to a centralized sales force. For instance, it’s really hard to know what unit [in a particular property] has that wonderful view facing the oak tree if there’s a centralized sales function.”
