As the economy slowly improves, apartment renewal rates are finally beginning to creep up as owners and operators focus heavily on resident retention to keep much-needed heads in beds.
“We are doing whatever it takes to retain residents,” said Paolo Pedrazzoli, president of Malibu, Calif.-based Sirius Property Management, who served as a panelist in a session on resident retention at the 2010 MFE Conference last week in Las Vegas. “We continue to offer one-time concessions on renewals to avoid reducing rents, but we will do that if we have to.”
Moderated by Erin O’Brien Ditto, senior vice president of Greensboro, N.C.-based Bell Partners, the panel also included Laura Khouri, president of Irvine, Calif.-based Western National Property Management; Rick Jones, regional vice president of Atlanta-based Lane Management; and Pam McKenna, portfolio manager of Portland, Ore.-based Guardian Management.
All panelists have implemented a number of resident retention incentives over the past few years including the ability to get out of a lease if residents lose their jobs; matching renewal rents with rents for new residents; and bi-monthly rent payment programs. Now, as the economy starts to rebound, firms are hoping to minimize concessions and restart ancillary services they had not been able to offer due to recession.
“We’re trying new ideas to boost resident retention,” said Jones, who reported Lane’s conventional portfolio renewal rates at 62 percent this year compared to 56 percent in 2007, with Baltimore being the company’s weakest market and Washington, D.C., the best market. “We’ve stopped giving away things for free and are now focusing on ancillary services we had given up on.”
Not surprisingly, companies also continue to focus on top-notch customer service to retain residents. “You start the renewal process as soon as they move in; we focus on the first 90 days,” McKenna said. “You only have one chance to make a good impression, yet consistency is also required. You need to have constant contact with your residents, not just when they move in.”
Guardian has implemented a comprehensive resident interaction schedule which includes giving residents a gift basket 24 hours after move-in; sending a manager to the unit a week later with a packet of materials including a map of local amenities and coupons; a follow-up call from the manager at one month; and thank-you notes at two and three months.
Lane has found success hosting an “Oops, we goofed!” party to make up for a bad on-site experience—a long wait for move-ins at a 1,000-bed student housing community. “The staff poked fun of itself,” Jones said.
Keeping staff motivated is key to keeping residents happy, Khouri added. “People are our most important asset. Rents are down 11 percent since 2008, and that is a bummer. We have to reach out and touch the associates. I go out to the properties every weekend.”
Panelists also noted that though they’ve had to halt or scale back on apartment renovations due to tight budgets, adding cost-effective amenities can be a big resident draw and retention tool. “We went 100 percent smoke-free a few years ago, and that’s become a big retention point for us,” McKenna said. Likewise, allowing pets (for a small fee) and offering green features has also helped win over residents.