“Between 2015 to 2020, the apartment rental market in the U.S. demonstrated a steady 1.7% growth, which reached $173.4 billion in 2020. The COVID pandemic, however, caused rental demand to plummet by 4.5% in 2020.”
So says a recent survey conducted by Fayrix, an offshore software developer. The survey was particularly interesting in that it serves as a sort of affirmation of how bad things really got last year and, more important, how much better they can now become. Different, yes. But better. One of the most intriguing points from the survey results is an interesting take on the question of manager specialization.
Although the essential statistics from last year seem dire, the survey results point to the growth of new opportunities and trends that can only bode well for those who adapt to shifting markets.
For instance, Fayrix indicates a shift from oversaturated urban markets to more suburban possibilities, in large part due to a fear of the traditional overcrowding city centers are known for. “Taking into account that single-family rental units were on the rise in the past few years,” the report states, “moving the market outside of big cities and their constantly growing monthly rents seems to be quite obvious. For tenants, this means lower rental rates and [for brokers] new prospective markets.” Developers, of course, will follow the money, says Fayrix.
Demographics extend far beyond geographic considerations, and while millennials are still the market dominators, Gen Z is coming up fast. “Ninety-seven percent of Generation Z plan to buy a home in the future. For property managers, this means that, in the coming years, tenants will opt for more affordable (yet functional) homes that will allow them to maximize their savings for the future.”
Are you a generalist or a specialist?
The tea leaves also point to a greater focus on segmenting your professional focus to particular niches within a greater market segment, and specializing in that segment rather than trying to be all things to all people. This, says the survey report, will lead to greater market security. Results also indicate residents will seek property management certification within asset sectors. IREM members might find this somewhat counterintuitive in that, as we have all seen, market diversity can lead to minimized risk.
“While segmentation helps managers to set themselves apart from the competition,” Fayrix argues, “specialization is what brands them as reliable rental professionals. With property management activities starting to involve more technologies, skills and regulations to be aware of, it becomes evident that prospective renters will look for certified professionals in the market in the first place.”
It should come as no surprise by now that COVID accelerated property management faith in, and use of technology. Also, not surprisingly, it’s a trend that will continue, including such formerly gee-whiz applications as cloud usage, augmented and virtual reality, and the evolution of smart buildings.
And, of course, big data, which “can give property managers a broader view of the market. Equipped with better knowledge of their tenants' past activities and preferences, property managers can offer more relevant properties. Rental managers can source tenants' data from websites, property management systems or CRMs [Customer Relationship Management].
“What's more,” the report continues, “big data helps managers and landlords get a better picture of what's going on with their facilities in terms of energy, water and electricity consumption. Being able to constantly track all utilities in real-time keeps managers aware of their business in general, and helps address unusual situations in a timely manner.”
A little farther out on the learning curve is artificial intelligence and machine learning, both of which can ease and render more efficient traditional manager/resident communications. This includes, “answering generic questions, getting to know customer preferences, or even holding virtual showings,” says the report. “Another major advantage of artificial intelligence is that it’s able to assess pricing trends and make corresponding predictions and analysis.”
The post-COVID property management environment is revealing itself, and there are new rules of engagement for property managers and residents alike, says Fayrix, “and it is in the best interest of market players to adjust to the latest trends in property management technologies.”