It’s not a typo. It’s not all gloom and doom unless you decide to get caught up in it. I attended the Apartment Association of Metro Denver’s Economic Conference this morning and the economists who presented were painting as optimistic a picture as they possibly could. The whole time I couldn’t help but think of this title because it seemed to be the exact picture they were painting. Denver is slated to be one of the top markets in the nation in 2011. Jobs are coming back. Concessions are decreasing. The gloom is where we are today and what we have all gone through up to this point. Personally, many of us have experienced either job loss or income reduction. Professionally, our companies have experienced layoffs, budget cuts and become reliant on concessions. Jeff Riggs of Baron Properties put it well when he said, “there are challenges, but we have an opportunity to gain back what we lost… we have a different environment and have a chance to catch up.” The boom comes in building confidence at the site level that generates excitement and enthusiasm rather than doubt and fear as you take away their concessions. Occupancies start to go up, rents start to go up and we start to “catch up”. I know catching up doesn’t exactly sound like a boom, but it’s all how you look at it. We surely can’t get ahead until we catch up.
I’ve not blogged in a while, but this topic keeps coming up almost every day for me. I see it in marketing, IT and operations on a regular basis. Essentially, there is a race in our industry to be the first company that can be a one-stop-shop for owners and managers. The more services a company can offer, the more weapons they have in their arsenal. In meetings with credit reporting/background verification companies, they talk about their Craigslist posting service and web site design capabilites. In meetings with property management software companies, they talk about their ability to do utility billing (RUBs) or lead tracking numbers. In meetings with lead management and call tracking companies, they talk about their upcoming property management software package. In a few years you will be able to go to the company that did your water billing five years ago to design your website, track your leads and manage your social media.
There is an inherent problem to all of this, initially, but I think we’ll find it to be extremely successful in the long run. The best way to illustrate this issue is using an industry that is very near and dear to me, the auto industry. Growing up in Detroit, I watched the big dogs slowly lose market share to newcomers to the market. Hyundai and Kia, for example, started to manufacture cars in South Korea. Hyundai was originally a construction company. Kia originally manufactured bicycle parts and metal tubing. These two companies are now one large company and happen to be the fourth largest manufacturer of automobiles in the world. A South Korean company. Who would have thought? Just like who would think today that a company that we use today to track our marketing leads might become our property management software provider in a few years? It will happen and stranger things will also happen. Here’s the issue I need to address: Kia and Hyundai made crappy cars for a long time. Cheap and crappy. So crappy, they had to put 10 year warranties on them in order to compete. These cars didn’t even last ten years. The tires didn’t even last ten-thousand miles. I’m exaggerating, but hopefully you get the point.
The companies that are in this race in the apartment industry are essentially designing a vehicle for property owners and managers to drive their business. The problem is some of them have crappy transmissions and some of them have to demand a recall because the gas tanks explode on impact. To put it in terms of our business, some of them have crappy craigslist posting tools and some of them have not quite figured out how to make sure there isn’t a break in the code when a resident tries to reserve an apartment online. This means we have to have spare parts lying around to compensate for the shortcomings of the “one-stop-shop” concept until it is perfected. This could get pretty costly, but in the long run we may simply have to sacrifice in order to support this initiative. Also, there will be a-la-carte options offered as well, I’m sure, but this too will more likely cost more than the one-stop-shop solution.
I don’t know who the winners will be and I sure don’t know how long it will take for the first company to get there, but the bottom line is, this is a great thing for our industry. Kia and Hyundai make some pretty nice cars today and are winning awards for quality and design. I hope the companies that are competing in this race to be all things to all people in the apartment industry figure this out soon. It’s exciting to watch as the quality of products and services in our industy continue to improve.
AG iPhone application
So the numbers are in for the Apartment Guide iPhone application and on paper it looks pretty good, according to Primedia’s press release earlier today. Over 230,000 downloads. Like most of you, I’d like to dig a little deeper and find out how many of those downloads resulted in email or phone inquiries. I’m sure my account rep will be in this month to tell me.
Without that information available, I’d like to draw a picture of how truly remarkable this could be. This is the equivalent of 230,000 Apartment Guides being added to their distribution. That’s 28,750 books per month since they started in October. I would imagine it’s probably closer to 40 – 50,000 per month since they launched their advertising campaign in March. 40 to 50,000 additional users of the Apartment Guide without adding a single page of print. At that rate they will approach 600,000 downloads by the end of the year.
There are a million and one questions that need to be asked and answered, but at first blush, this seems to be a successful first step in the right direction to improve the consumer experience and potentially increase traffic to communities advertising on Apartment Guide. Win-win.
And so it begins…. Please read this article before you go any further. “Corporate Meltdown Leaves Renters in Limbo”
My argument to compete against homes for rent written at the end of 2008 is out the window. Now owners of apartment communities are losing their investments and the fallout is impacting their former residents and will begin to impact all of us in one way or another. For management companies looking to grow, if you’re on top of things, you should be able to pick up some management deals out of this and there will be business out there for everybody. You just need to decide if this type of business is a fit or a distraction for your current business model.
While this situation is hopefully an extreme exception to the rule, the resident quoted in the article is 100% correct. She “shouldn’t have to pay $800 a month to live in a… hole.” Listen to her story.
So the question is, how do we make it easier on the residents? There’s not much that can be done to change this specific situation as it unfolded, but there is much that can be done once new management takes over. For the management company that takes over, communicate with the residents immediately. Notify the residents that new management has taken over and by all means explain what happened in the first place. A little empathy goes a long way. Do not make any promises that you cannot keep. These residents just want to have peace of mind that their water and power are not going to be shut off. Set up a temporary call center so residents can voice thier concerns or hold a “town hall meeting”. Know that you are walking into a hornet’s nest and the only way to change the perception of the residents will be to tackle their issues head on. If you don’t have an in house Public Relations Manager, working with an agency would be a smart decision. This is an opportunity where you can’t make things much worse and in the end can be a “hero”. The concerns voiced in this article can be addressed by Property Management 101.
I have my own opinions on how this should have been handled up front and if you are a frequent reader of my blog you can probably come to those on your own. I am no expert in this arena, but I’m sure someone reading this might be. Please feel free to share your opinion on how this could have been avoided or at least how the residents paying $800 a month could have been warned in advance. There is a solution out there somewhere that makes sense. As an industry of professionals, it’s our responsibility to make it known so the next company to face a similar situation doesn’t leave thousands of residents in limbo.