Many major markets are again finding balance as construction starts have ticked upward to pace with demand. This occurrence means competitive markets are once again offering leasing incentives and property owners having to sharpen their pencil on how and where to devote dollars for upgrades and amenities that provide competitive value for the residents and yield for the asset.
When rents fall and pricing power diminishes for owners, it shouldn’t be a guessing game as to what market-specific amenities are in demand. The best-equipped properties win leases ahead of their competition by offering in-demand amenities packages. The following are four areas to focus attention when rents fall:
First – The Competition. Updated market surveillance is imperative. Real-time pricing can help operators gain a competitive advantage by cross-referencing pricing information to the amenities that are selling. Accomplishing this requires maintaining a real-time rent survey within your market. Rent surveys must take into consideration “the real” competitive assets as definitive market areas are seldom a circle or a square, so understanding the true bounds in which you are drawing competition is paramount. Enodo provides dynamic market areas that take into consideration directly competitive assets as well as where current and future residents presently reside. As a first step, you should always compare your asking rents to Enodo rents to determine whether you are in line with the market.
Second– Renewals. Taking care of current customers is the first step toward ensuring that vacancy doesn’t rise further. Every renewal means one less unit on the market, and rent growth at the expense of increased turnover is a losing game when vacancy is already rising. Enodo helps by providing real-time tools that convey aspects about your property, competitive assets, and the local market that are actionable toward encouraging retention.
Third- Marketing Plan. Determine a marketing strategy that is based on market surveillance and creates incremental increases in revenue, while still maintaining optimal occupancy levels. There are times, like during installation of wholesale upgrades, when creating strategic vacancy is good. This is a time to review all incremental income generators and identify those with pricing elasticity as compared to comps.
Using the rent roll component within Enodo allows you to track lease end-dates, and directly cross-reference this information with units that can benefit from upgrades for future residents. The opportunity to implement small improvements for future residents can to reduce unit time on market and increase the future likelihood of retaining those new tenants, thus; retaining revenue, eliminating turnover and installing market-demand upgrades concurrently.
Fourth- Communication. Coordinate your efforts so that all on-site and off-site personnel are aware of the challenges in the market and are reviewing relevant information to help support operations. This includes the use of relevant and real-time rent roll information, comparable and competitive review, and a realistic outlook on the market. There is great value in having confidence in the numbers; from targeted to actuals. Creating transparency allows for professional work to occur with everyone recognizing they are on the same page, seeing the same data points, working towards the collective goals set out in front of them.