UDR Pushes Online Renewals to 80 Percent

By Joe Bousquin | May 3, 2011

After making news last summer for bridging the gap between multifamily marketing and revenue management, Highlands Ranch, Colo.-based UDR has passed another milestone by using technology to rent apartments. Since it started offering the option last July, more than 80 percent of residents who chose to renew leases with the REIT did so online.

Tom Toomey, UDR’s president and chief executive officer, characterized that acceptance rate as “phenomenal,” especially in the relatively short, 9-month time span the company has had the system in place. The news comes as further affirmation of the spreading influence of technology not just on the marketing side of the apartment game, but in operations, as well.

What’s more, at properties where residents had a high propensity to renew online, UDR cut turnover by 2 percent, while boosting rents by 3 percent. The kicker at those outperforming communities? Ninety to 95 percent of residents who live there accepted UDR’s initial rental increase offer, no questions asked.

“Residents can make faster buying decisions and more are choosing to stay with our communities,” Toomey said.

The announcement came on the heals of a simmering debate in the industry, one that’s been trying to pinpoint the exact cost of “churn” in an apartment portfolio, to focus in on the sweet-spot, from a revenue management perspective, of pushing rents versus renewing existing residents.

Satisfacts Research estimates that the average cost for turning an apartment is $4,100, after taking into account average vacancy loss days, concessions, marketing, leasing staff time and repairs. At a company such as UDR, which owns more than 59,000 apartments, those costs can add up to real money, real quick.

UDR was able to push its online renewals by tying offers to its YieldStar Price Optimizer revenue management system, which it used to help generate keep-living-here offers to existing residents. By incenting residents to renew within a pre-determined window of time, or offering add-on amenities such as a color accent wall or custom closet, UDR has been able to introduce an element of the marketing-meets-customer-loyalty programs seen in the airline and hospitality industries.

The initiative helped lead Carrollton, Texas-based multifamily software giant RealPage, which owns YieldStar, to launch a new product line that it’s calling Online Renewals.

“UDR has been outstanding in working with us to develop Online Renewals. Their insight and innovation have created a game-changing product for the multifamily industry,” said Dirk Wakeham, president of RealPage. “Traditional online leasing has been a valuable tool for years. Now, for the first time, RealPage is extending the technology and strategy into the area of lease renewals, enabling property managers to retain the residents they currently have. This should create costs savings associated with marketing to new residents and allow leasing staff to devote more time to other site-level operations.”





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The Poor Man’s RevMan? Meet Market Comps

By Joe Bousquin | April 19, 2011

Think RevMan is just for the big guys? Think again. There’s a new tool out that can help do the pricing for you – sort of – for a fraction of the cost of a full-blown revenue management system.

Dubbed Market Comps, it’s the latest offering from the real-time availability experts at Scottsdale, Ariz.-based VautWare, and is powered by listings data from more than 25,000 properties who advertise on Rent.com.

With an interface that’s way more simple than the firm’s PadZing offering, which touted itself as the Zillow for multifamily before Zillow starting doing multifamily, Market Comps offers community managers a single-screen view into their competitors’ pricing. It shows them where their own properties stack up on average rent and rent per square foot, even unit-specific pricing for different floor plans.

Market Comps' baseline property comparison screen.

Not only does that hold the promise of taking a big load off leasing agents who spend at least part of their jobs calling the competition for current rents, it’s a first step toward automated pricing for smaller operators. What’s more, it provides an alternative to full-blown software packages costing tens of thousands of dollars. Multifamily RevMan watchers have often pointed to the price points of those solutions as one of the major impediments to wider-scale adoption of the technology by small and mid-size operators.

“At a minimum, its a first cut of a poor man’s revenue management system,” said Mike Mueller, VaultWare’s CEO. “It’s property specific and takes just minutes to set up. We made it super simple for our industry.”

After fielding feedback from users that PadZing was complicated and confusing to use, VaultWare developed Market Comps to do one thing well: show you the actual pricing at your comps, updated once a week, and where you stack up against them, on one screen. Gone are PadZing’s cumbersome mapping tools, or the myriad filters you could apply to the wealth of data there.

No, instead of giving you too much, Market Comps gives you more by giving you less. The tool has two basic views, graphing your property against your immediate comps, and comparing your property to those around it by unit type. You can pull down tabs for average rent, by unit type, for the last 1 to 24 months, and you can export any of it to Excel for a property-by-property comparison of how you’re doing against your peers. Click here for a video tour of the tool.

Market Comps' floor plan comparisons and reports exported to Excel.

Finally, you can set up e-mail alerts to receive notification when your own rents hit a pre-determined trigger against your competition. For example, if you want to know when your 1 bedrooms fall outside of a range within $25 of your nearest comp, Market Comps will send you an email telling you so.

“Most other sources are expensive and already out of date when purchased,” said Mike Cornell, VaultWare’s president. “Market Comps does the work for the properties and ensures they are aware of changes to their market conditions as they happen rather than reacting to a trend that happened weeks or months ago.”

Market Comps' email alert tool

Perhaps most compelling about the offering is price: the basic version is free for VaultWare and Rent.com customers, while the Premium offering – which allows you to see your property-by-property comp report, export floor plans and set alerts – is $300 a year. At this time, the product is only available to customers of the those two firms.

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Apt World Passes “Point of Vulnerability” Relatively Unscathed

By Joe Bousquin | April 12, 2011

It’s okay, you can exhale now. Multifamily made it past the first quarter of 2011, and the renters didn’t run away.

Given the past couple of years in the apartment market, the first quarter of 2011 could have gotten pretty scary. A lot of leases written in early 2010, when prices were still relatively sluggish, were set to renew right in the teeth of 2011′s newly rising rents.

That’s kept apartment pros up at night lately, fearing that their recent rebounds in occupancy might be snatched away if renewing residents took flight in a sticker-shock- induced panic.

But, like most things we worry about, nothing really happened at all.

MPF Research, the number-crunching dataticians that back up RealPage’s YieldStar Price Optimizer revenue management tool, put out results for first quarter 2011, and mostly, not much has changed: occupancy and rents continue to rise, if marginally, and people aren’t buying condos and houses.

U.S. Apartment Occupancy. MPF Research.

Which is all good news for apartment world.

“As you look across calendar 2011, first quarter really was our point of vulnerability,” said Greg Willett, vice president of research and analysis at MPF Research. He explained how a surge in activity early last year led to bulging occupancies that had the potential to deflate in the face of higher pricing now.

“We had huge leasing activity in early 2010, because that’s when the economy really started turning around, so that meant a lot of renewing, 12-month leases were coming up,” Willett said. “Also, those folks signed leases right at the bottom of the cycle in terms of pricing, so there was definitely going to be some sticker shock involved. The question becomes, did we hold onto those residents, and did we manage to continue to have some solid rent growth as those people renewed?”

The answer, thankfully, is yes. Occupancy made a minuscule, but positive 0.1 percentage point gain in the quarter to reach 93.6 percent. That’s 0.8 percentage points higher than last year. More appealing, however, is the fact that rents kept climbing, up another 1.1 percent for the quarter, and 3.3 percent for the year.

U.S. Annual Rent Change. MPF Research.

With that momentum, MPF Research is projecting an overall rent growth of 5.1 percent in calendar 2011.

That will be achieved, in part, at the expense of the for-sale housing market, which is still lost in a forest of foreclosures, with no clear path home. “Most of the households with leases up for renewal in the first quarter continued renting apartments, rather than leasing rental condos or single-family homes or choosing to make housing purchases,” Willett said.

On a market-by-market basis, San Jose, Calif., and New York had the biggest year-over-year price increases, jumping 7.8 percent and 7.4 percent, respectively. Las Vegas continued to be multifamily’s biggest – and only – loser. Prices there were down 3 percent for the year, the only market that recorded a 12-month drop.

There was strength in some of the places you’d least expect it: rents rose in down-and-out Detroit by 4.6 percent, and between 3.8 and 4.2 percent in Cleveland, Chicago and Pittsburgh.

“If there are any surprises emerging in metro-level results, they’re coming in the Midwest and the Rust Belt,” Willett said. “Rebounding manufacturing job growth is creating enough apartment demand to allow rents to rise faster than the national average.”

Metro                                Annual Rent Growth
1. San Jose, Calif.                          7.8%
2. New York                                    7.4%
3. Greenville, S.C.                         6.9%
4. Miami                                           6.8%
5. El Paso, Texas                           6.3%
6. San Francisco                           6.2%
7. Portland, Ore.                           5.7%
8. Oakland, Calif.                           5.4%
9. (tie) Baltimore                          5.3%
9. (tie) Washington, D.C.           5.3%
10. (tie) Seattle                             5.1%
10. (tie) Minneapolis                  5.1%

Source: MPF Research

What do you think? What surprised you during Q1 2011? Email me, or join the discussion on the LinkedIn Apartment Pricing Professionals page.

Whatever your thoughts are, get ready to share them at at AIM 2011, set for May 2-4 at the Hyatt Regency in Huntington Beach. Then, get the story behind the numbers at the  inaugural Apartment Revenue Management Conference, slated for September 12-14.

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Taking Stock: Firms Using RM

By Joe Bousquin | April 5, 2011

The following represents what we believe to be the most comprehensive accounting of multifamily firms using revenue management ever compiled.

Not all of these firms are at the same point in the adoption curve. Some are multi-year veterans who long-ago rolled RevMan out to their entire portfolio. Others may still be in pilots, with just one or two properties online. Then there are those who are still conducting “head-to-head” tests of various solutions at multiple communities.

Regular readers will notice that we’re not tracking the specific solution each company is using.

We’ve made this adjustment for a few reasons. First, what once was a fledging collection of RevMan pioneers in multifamily has now expanded enough for the term “universe” to rightly apply to it.

Yet, just like counting the stars, it’s nearly impossible to keep up with every company using this technology. The subsequent task of accurately tracking which solution each is using has now grown beyond this humble blog’s resources.

The overall goal of MFR.com has always been to track, cover and highlight the use of RevMan in multifamily, and we will continue to do exactly that.

But if you’re shopping for a solution and you want to know which one would be best for you, you’ll still be better served by doing it the old-fashioned way: get on the phone, press the flesh and get out to as many meetings as possible. Ask your colleagues, associates and peers about their experiences. There’s not a Yelp! for multifamily solutions – yet — but we’d wager you can find all the answers you need in your phone’s contact list.

Our goal in the future will be to determine how many units are actually being priced using all flavors of RevMan in the industry, and we’ll be talking with third-party providers who are better suited to gather and track that sort of data.

In the meantime, we will continue to track firms using RevMan, and maintain a broad, if not all-inclusive list. Which means if you fit here, but aren’t listed and would like to be, we’d love to hear from you.

Likewise, if you’re included, but would prefer not to be, email me.

And remember, make sure to get the latest on this and all of multifamily’s tech trends at AIM 2011, set for May 2-4 at the Hyatt Regency in Huntington Beach. And to get the focused download on all things RevMan, keep September 12-14 open for the inaugural Apartment Revenue Management Conference.

And now, the list:

  • Abacus Capital Group
  • AIMCO
  • Alliance Residential
  • Allison-Shelton Real Estate Services
  • Altman Management Companies
  • Amerimar Enterprises
  • AMLI Residential
  • Apogee Residential, LLC
  • Archon Group
  • Archstone
  • Associated Estates Realty Corporation
  • AvalonBay Communities
  • B & M Management Company, LLC
  • Babcock Brown Residential
  • The Bascom Group, LLC
  • The Bainbridge Companies
  • Barrett & Stokely, Inc.
  • Bell Partners
  • Berkshire Property Advisors
  • BH Management Services, Inc.
  • BlackRock
  • Blue Ridge Companies
  • Bonaventure Realty Group, LLC
  • The Bozzuto Group
  • Capstone Real Estate Services, Inc.
  • The Carlyle Group
  • Carmel Partners
  • Camden Property Trust
  • Carter-Haston Real Estate Services
  • Centennial Holding Company, LLC
  • CIM Group, Inc.
  • Cohen-Esrey Real Estate Services, LLC
  • Colonial Properties Trust
  • ConAm Management Company
  • Continental Properties Company
  • Corcoran Management Company
  • Crawford Communities
  • CWS Apartment Homes
  • David Drye Company, LLC
  • DEI Communities
  • Dominion Management, LLC
  • DRA Advisors, LLC
  • Dunes Residential Services
  • E&S Ring Management Corporation
  • ECI Group
  • Edgewood Management Corporation
  • Epic Asset Management
  • Essex Property Trust
  • Equity Residential
  • Ferebee Properties
  • First Choice Management Group, Inc.
  • First Communities
  • First Montgomery Group
  • Flournoy Properties
  • Fogelman Management Group
  • Forest City Residential Management, Inc.
  • Forest Property Management
  • FPI Management, Inc.
  • Freeman Webb Company
  • Gannon Management Group
  • General Investment & Development
  • GF Properties Group, LLC
  • GMH Capital Partners
  • Grand Peaks Property Management
  • Greystar Real Estate Partners
  • Griffis/Blessing, Inc.
  • Grubb & Ellis Company
  • Gumenick Management Co., LLC
  • Hamilton Zanze & Company
  • Henderson Global Investors
  • HHHUNT
  • Hirschfeld Properties, LLC
  • Holland Residential
  • Home Properties
  • IMT Residential
  • Interland Corporation
  • The Irvine Company
  • JBG Residential
  • J.C. Hart Company
  • JPI
  • Julian LeCraw Company
  • Jupiter Communities
  • The Kamson Corporation
  • KBS Companies
  • Korman Residential
  • Landmark Residential
  • Laramar Group
  • LaSalle Investment Management
  • Legacy Partners
  • Lewis Operating Corporation
  • Lincoln Properties
  • Madison Apartment Group
  • Mark-Taylor Residential, Inc.
  • MC Companies
  • MEB Management Services
  • Mid-America Apartment Communities
  • Mission Residential
  • Morgan Group
  • Morgan Properties
  • NOI Capital Partners
  • Noland Real Estate Services
  • Northland Investment Corporation
  • Olympic Investors
  • Orion Real Estate Services, Inc.
  • Ovation Property Management
  • Pacific Living Properties, Inc.
  • PASSCO Companies, LLC
  • PEM Real Estate Group
  • Pinnacle — American Management Services
  • The Prime Group, Inc.
  • Prometheus Real Estate Group, Inc.
  • Post Properties
  • PRG Real Estate Management
  • Regional Investment & Management (RIM)
  • Renaissance Property Group, LLC
  • Resource Residential
  • Riverstone Residential Group
  • RREEF
  • Sack Properties
  • Sagebrush Capital Management
  • Sares-Regis
  • Sentinel Real Estate Corporation
  • Sequoia Equities, Inc.
  • Shea Properties
  • Sidal Realty Company
  • Simpson Property Group
  • The Sobrato Organization
  • Sterling American Property, Inc.
  • Steven D. Bell & Company
  • Stockbridge Real Estate Funds
  • Stonemark Management
  • Sunrise Management
  • Switzenbaum & Associates
  • TIAA-CREF
  • Trammel Crow Residential
  • Transwestern
  • UDR, Inc.
  • Univesco
  • Verde Apartment Communities
  • Walton Communities
  • Washington Real Estate Investment Trust
  • Waterton Residential
  • Weinstein Properties
  • West Coast Redevelopment
  • Westcorp Management Group
  • Westdale Asset Management
  • Western Rim Property Services
  • Wilkinson Real Estate Advisors, Inc.
  • Woodmont Real Estate Services
  • The Worthing Companies
  • ZRS Management, LLC
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