I've been listening a lot for the last few months as the economy has crept along in this downward spiral that so many of us are experiencing as my clients and friends in property management talk to me about how bad the market is out there. I always ask about their traffic and specials and how the occupancy looks because I think it is important to be pretty up to date with the market trends in the area. (Truth be told, and I shouldn't really admit this because I'm a little embarrassed but, I do more market surveys now then I ever did as a leasing consultant. I didn't realize how important they really were when I was on property, but I sure do now!)
One of the common themes I have heard repeatedly is, "I have lots of people giving notice and virtually no incoming traffic."
Now, if I had been hearing this from just one or two properties, I might think that it had something to do with their current retention efforts or customer service, but it's not one or two communities. It's about 75% of them.
75% of places are having notice given and having no traffic. So if you've got people moving out, and they're not moving in somewhere else, then just where are they going?
What we're seeing is more and more people in the roommate situation. Mike has a one bedroom at 1000 dollars a month. Marshall has a one bedroom at 950 dollars a month. Mike and Marshall both look for a new place in a heavy concession laden market and discover that not only could they each find cheaper apartments with 2 or 3 months of free rent, but if they were to rent one two bedroom together, then they could probably get that for only 1200 dollars a month, or 600 dollars each. They each post for free on craigslist.com or some other bulletin board service, or maybe they work together, but somehow they find each other. 2 homes vacant, one home filled. No matter how you slice it, that makes for a painful occupancy rating.
Your future residents are probably going to be looking for the perfect roommate apartment, so now might be a great time to redo the two bedroom two bathroom model and make it a little more focused to this demographic.
- Set up both bedrooms as livable spaces showing room for computer desks and full sized beds or bigger.
- Aim your decor to a younger, more modern, and professional audience. Grandma's doilies just aren't going to cut it.
- Make sure that you show both bathrooms as livable and usable spaces. Too many times, I tour a model and one bathroom is made up and the other one looks like the Grinch just stole Christmas from it. Nothing left but the wires on the wall.
- If your model still has an older model television in it, consider upgrading and including a game system.
So that accounts for some of the vacancy and traffic losses, but what about the rest of the people out there? In a tough economy, people retreat to the safety net of home, and families are going to become much more extended until we see a rise in consumer confidence. The folks over at Marketwatch published an article today that said consumer confidence fell on the index from 44.7 to 38. (Now, if I hadn't just spent a good long vacation full of quality time with my family, I might see how going back home would be pretty tempting in these tough times. However, too much quality time is usually a pretty good eye opener and I become really happy that I don't have to live at home anymore.) How does the extended family equation relate to the MFH industry?
Well, those who are returning home, might be returning home to apartments that their parents live in, so reminding your residents that, if your state law requires it, all occupants must be on the lease to cover legal issues might be the first thing you think about doing. It's probably not going to be fun though, because for a lot of these families, this is going to be a touchy or sore subject, so it's going to take finesse and some lemonade magic to spin this to a positive aspect.
A lot of families might be looking to move up in the number of rooms they need as well. What is your policy on apartment transfers? Would you consider making it a little more flexible for those looking to move up? What about how you're marketing your three or four bedrooms? Have you yet shifted your focus away from the more easily filled 1 bedroom homes?
It's rough out there and it's hard to know on this map with so many paths which one is going to get you where you want to go. What are you trying in your communities to try to cope with renter consolidation?