Multifamily Owners Are Centralizing Operations In Lieu of On-Site Teams

By Franco Faraudo

Multifamily buildings have often been divided into two categories: buildings that are big enough to support an on-site management team and ones that aren’t. Traditionally, large multifamily landlords prefer the former because of the way that on-site teams are able to provide a better resident experience, reduce risk, and help buildings lower vacancy. But the slowing multifamily market and new technologies are causing many large landlords to consider changing their business processes and centralizing at least some of their building management teams.

There are obvious cost savings that come from consolidating on-site leasing and management teams into one centralized office or call center. More buildings can be managed by fewer people, and some of the office space used by on-site teams can even be converted into additional units. But there are also pitfalls. Removing onsite staff can result in a reduction of service quality that can cause bad reviews, lower retention, and even price reductions. Removing oversight can also call the attention of bad actors who can damage property or engage in unlawful acts.

But some of the biggest multifamily owners are experimenting with ways to centralize at least some of their operations in a way that doesn’t negatively impact the resident experience or leave the property exposed to loss. Avalon Bay has experimented with eliminating leasing teams from one of its multifamily concepts in Maryland since 2021.

The pandemic led them to try self-guided tours. The success of their online booking and showing technology gave them the idea of eliminating the on-site leasing team altogether. The results have been positive, at least for the select properties that they have tried it on. The property in Maryland that they first experimented with was designed to reduce costs and provide more affordable rents, so tenants were likely more accepting of less on-site help than more luxury properties.

One of the main benefits of centralizing leasing teams is the reduction of employee turnover, something that has always plagued the multifamily industry. “Our turnover rate in leasing has gone way, way down,” said Kim Nicholson, Senior Director at Greystar. “That’s a huge win because you don’t have those onboarding costs because you’re not consistently turning over the staff.”

Being a leasing agent can be a lucrative career, but it doesn’t always provide the most steady income. When leasing is struggling, commissions go down. But when leasing is doing well, commissions can also go down. “You have rock star leasing agents who are crushing it, but when the building is completely leased up, they get bored, and then they’re gone,” said LCOR’s Chief Operating Officer Mike Hogentogler.

As multifamily owners look to grow their portfolios, particularly in an area where they already have multiple properties, they can use centralization to expand their search to buildings too small for on-site teams. This trend of centralizing management could even help owners incorporate single-family homes into their portfolios. On-site teams will always be important to help keep a building safe, enjoyable, and profitable. But as technology like AI and computer vision become more available we might start to see more parts of building management being moved off-site.

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