The Vital Role of Service in Asset Performance
In the rush to own multifamily, the resident experience can sometimes go by the wayside, according to JLL's Lela Cirjakovic.
Market fundamentals in the multifamily real estate sector remained strong during second quarter 2022 as rental growth reached historic levels in response to rising consumer demand and limited supply. According to JLL research, the average U.S. rental rates increased $19 in June, reaching an unprecedented high of $1,706 per month, a MoM increase of 1.2 percent. Nationally, rents increased an average of $73 year-to-date with occupancy rates currently at 96 percent.
With rent growth above historic levels and heightened investor focus, capital poured into the multifamily sector. According to JLL research, investment sales activity came in strong over the past 12 months, with nearly 25,000 properties trading hands, totaling some $303.4 billion in transaction volume. Atlanta leads the pack with 492 sales, representing more than $20 billion in value, followed closely by Phoenix, New York, Los Angeles and Washington, D.C.
While year-over-year growth decelerated by 50 basis points from the 15.2 percent recorded in February to 13.7 percent, it is still considered exceptional performance.
No Time to Get Complacent
This unprecedented performance has caused investors to shift their allocations, giving multifamily real estate a true Cinderella moment in terms of performance and investor interest. However, there is a tendency to get complacent when performance is this strong. And the first thing that goes by the wayside is service—service to the client and service to the resident.
For multifamily operators, turnover is the most challenging aspect of management, and one of the costliest. Turnover of onsite associates and turnover of apartment residents is inevitable, but looking at events and service issues that cause undue churn will benefit reputation, cost and ultimately asset value.
While it may seem obvious, a great resident experience always starts with people, and providing a great resident experience is only possible once you have created a meaningful, respectful and balanced experience for associates.
Multifamily owners and operators have recognized the value of service and have taken a cue from the hospitality industry, even adopting the terminology. However, to optimize asset performance and impact value requires aligning the entire organization around a focus on the resident experience. A culture embedded in the desire to serve our customers flourishes when it permeates throughout the organization.
Mapping the journey is a great start, from initial on-line presence to the final move-out. Once you map the journey, it is important to understand how the customer moves through each critical touch point along the way. Do your systems and processes support your service commitments? Do they allow you to deliver a consistent, frictionless experience every time? The key is committing to continual review and improvement process that makes the end-to-end resident experience unique to your organization.
Communication is Critical
Vendors, associates, prospective residents, residents and corporate support staff all have a unique perspective that can elevate the journey. A framework that allows you to effectively gather critical information and synthesize that information into actionable steps will allow for iteration and service improvement along the way.
While technology has made life more convenient in many ways, it is not a substitute for service. Technology can certainly enhance communication, facilitate a process, remove friction and introduce efficiencies that would otherwise be unattainable. However, when technology fails to meet a resident’s expectations, skilled onsite associates must be prepared to artfully step in and take the service lead.
Operators and owners have access to more data than ever before. Sourcing the right data from key stakeholders and connecting the dots to optimize service is a key step to improved service and an improved experience.
Improved service provides a clear opportunity to gain greater asset performance. However, to achieve optimal service and satisfaction levels you must arm associates with the tools, knowledge and skills to usher residents seamlessly through their personal journey. What we do in multifamily operations is important in a very personal way. We can choose to curate an experience that creates lasting memories and provides residents with that “feeling” that they made the right decision, they belong and this is their home.
It’s all about taking customer service to new levels by working to meet residents needs along their personal journey to create a lasting positive experience.
Lela Cirjakovic is managing director, JLL Multifamily Property Management.