When Others Seek New Markets, This Mid-Atlantic Operator Wants to Stay Hyperlocal
Community Realty Co. has been serving owner-operators in this region for six decades and has no plan to expand outside it. Here's why.
In its six-decades-long existence in the Mid-Atlantic, Community Realty Co. has seen multiple ups and downs, and has overcome several periods of uncertainty and economic fluctuations. Specializing in property management, leasing and asset management for multifamily properties throughout the Mid-Atlantic region, the operator has been strengthening its position in the region, and has no intention to expand outside of it.
Today, Community Realty Co. oversees 16 communities in the Washington, D.C., and Baltimore areas. Multi-Housing News sat down with Director of Residential Management Benjamin Zeitler, who weighed in on the firm’s expansion strategy and provided his tips for boosting resident satisfaction and maintaining a high level of service despite increased operational costs.
Your company has been active in the multifamily industry since the 1960s. What are the latest challenges you’ve faced as a property management firm operating in the Mid-Atlantic?
Zeitler: Before the pandemic lockdown, many folks would leave their apartments to go to an office, as there were not a lot of remote work options before 2020. In the last few years, more and more residents are now working from home. This has been challenging in a number of areas such as general building maintenance and noise concerns, as well as programming common-area spaces. It has also impacted the maintenance of building systems such as heat/AC and electricity. In the past, these systems would often have an opportunity to ‘cool down’ while everyone was at the office. That is no longer the case.
The other piece that has been challenging has been getting occupancy levels back up to prepandemic levels after we witnessed a mass exodus from the city center to the suburbs. We have seen some of those renters come back, but not as many as there once were. Neighborhoods that are established and do not rely on office building occupancies have had an easier time getting back up. Hopefully that will change over the next decade.
To what extent have the currently tight lending conditions and the dampening overall market fundamentals impacted your portfolio in terms of occupancy and renter stability?
Zeitler: It has made some folks stay in their apartment longer, until a drop in mortgage rates happen, or until they have saved up enough to afford a mortgage in this current credit climate. Overall, we are seeing people generally staying where they are or searching for the next deal to keep their core costs down.
Our occupancy has dipped by about 200 basis points, which was forecast, but what we have noticed is that higher prices on core living expenses, including food and fuel, have made renters more cost conscious. I believe that this will stay for a while as many renters have only known near zero interest rates for most of their life. When a new normal sets in, I believe that will change.
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What do yo think makes your properties stand out from the competition?
Zeitler: Our communities stand out from the competition by offering good value for the apartment home that they choose to rent with us. We offer many of the same amenities as the larger management companies and our teams stay with us for a long time. The lack of employee turnover, along with our overall building maintenance and attention to the resident experience, really sets our company apart from the rest.
This must contribute a lot to the overall resident satisfaction. But how exactly do you meet their day-to-day requests?
Zeitler: We have an app that residents can use to communicate with the office, enter service requests, pay their rent, and communicate on a virtual resident bulletin board. After residents reach out to us, we are generally quick to respond to requests, many of them within 24 hours. All the onsite managers have an open-door policy which allows residents to speak with the manager and have their grievances heard.
And you must get a lot of insights from that app. What amenities are renters using most?
Zeitler: Residents are using our fitness centers, clubrooms and our rooftop spaces, the most. With many of them working from home, we find that they like to spread out and not work from their apartment or our business centers, and are often found on our rooftop or in our clubhouses.
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Do you have any tips on fostering a lucrative relationship with your residents that is in the benefit of both parties?
Zeitler: The resident experience is really important and goes a long way in fostering that relationship. If our residents have access to what they need and can communicate easily with the onsite team, it is usually mutually beneficial. We provide value in not only the building and the amenities, but our teams create a lot of value, too. If residents are happy where they live and enjoy living there, it is a great symbiotic relationship. As far as tips go, I recommend that operators focus on the resident experience and attempt to resolve the pain points that residents have with the building/company and focus on those items first.
How has your decades-long experience shaped your company’s strategy when it comes to multifamily management?
Zeitler: Our organization has always been locally focused. We do not have communities in other markets, just the Mid-Atlantic. We have learned over the years the ebbs and flows of the metro D.C. market and we are able to not be as reactionary as some other management companies may be. With this knowledge, we have learned what works best in keeping our communities full and our owners happy and we implement that strategy.
What is your long-term goal in the Mid-Atlantic area? Are there any new directions you wish to explore?
Zeitler: Community Realty Co. would like to continue to be a hyperlocal operator and be a trusted name in property management. Although we are a smaller organization, we offer everything that the larger institutional management companies offer—Yardi, resident apps, online leasing and rent payment etc. We are very tech-forward and focused on the resident experience while maximizing asset values through smart, modern upgrades, and a focus on unseen building maintenance.
With our smaller group, clients have personalized and weekly attention from our principals. We deliver, as good, if not better, results than many management companies in our region. We are focused on operational excellence in residential and commercial management and do not have any plans to go in a new direction.
Are there any particular smaller markets in this region that you intend to expand to?
Zeitler: We do not have current plans to expand into other markets in our region. However, based on incoming client needs, we have extensive experience in many Maryland submarkets, to include Montgomery, Prince George’s County and Baltimore County and city, along with many NoVa neighborhoods, and Richmond, and would be happy to expand into any of those submarkets.
How do you expect multifamily markets in the Mid-Atlantic region to perform, considering the current economic environment?
Zeitler: We are seeing renters coming back into urban Washington, D.C., and our suburb communities have been outperforming our expectations. We tempered our expectations this year, budgeting to be about 200 basis points lower than we normally would and it appears that we will hit that mark. I believe that we are in for lower occupancy and slightly higher expenses—given inflation, higher insurance and utility costs—for a while. Once inflation eases, I would expect things to move back more toward normal.
