The number should be horrifying to any multifamily apartment operator: Ninety-five percent of residents are considering pulling up stakes and moving out this year, according to a survey of 1,150 renters conducted by Chicago-based Internet listing service (ILS) Apartments.com. Okay, granted these are 1,150 renters who have been active on the ILS over the past couple of years looking for apartments, but the tenant trend to shop for better prices, particularly in an era with more flexible lease durations, is nevertheless forcing property managers to rethink retention programs as traditional renter patterns continue to show market flux.
“The 95 percent of renters looking to move certainly isn’t reflective of a national retention rate—these are people who have been engaged with our site, so they are obviously more likely to be moving,” says Apartments.com Tammy Kotula, the firm's public relations and promotions manager. “But while people are looking for a better bargain, price is not the only factor that comes into play for today’s apartment seeker. There are other things they weigh more heavily, including a nicer place to live, a safer neighborhood, and the lifestyle choice to be closer to work, friends, family, and school.”
Creating a sense of community and retaining residents by focusing on family is not lost on the NRP Group. The Cleveland-based multifamily developer and operator has been making a commitment to the smallest of residents as a larger focus on making renting families feel at home, according to company senior vice president Daniel Markson, who spoke on the “Resident Loyalty: Driving Referrals Through Great Resident Care” panel at the International Builders Show last week.
“The custom home building industry is great at loving their customer by providing endless personalized choices in construction and aesthetics and finishes,” Markson said. “In the apartment industry you can’t build for every client, so you have to fit the resident into the home by making them feel loved. You want to get yourself some great press? Take 20 kids on a field trip to your mayor’s office, or to your state representative. Yes, there is insurance and parental consent, but don’t let those logistics stop you.”
If the business growth of Orlando, Fla.-based Resident Rewards is any indication, property managers across the country are desperately looking for low-cost retention strategies to keep heads in beds. In just six months, the free, online rewards system has had more than 200,000 units enroll in its system that provides a move-in concierge program offering discounts on packing supplies and quotes on moving services, as well as providing online access to information on area schools and businesses. “The biggest factor in resident retention versus turnover is resident satisfaction,” says Resident Rewards director of business development Justin Henson. “That starts by making the move-in process easy. Renters begin making their renewal decision 364 days before it's time to negotiate rent again.” After move-in, Resident Rewards offers ongoing discounts to local businesses and a points system that can also be applied as equity to the purchase of a home, providing up to $5,000 in savings for renters who have paid rent on time for several years.
Of course, keeping residents in place for years—not to mention for a traditional 12-month lease term—is the current challenge, and results of the Apartments.com survey suggest the challenge could become even more strenuous in light of lease-term flexibility. While the typical peak rental season extends from April through August, 40 percent of renter respondents to the survey said they will be making their move during the first quarter of 2010, a 16 percent increase over 2009.
“It popped out at us that they would be moving at times other than the typical rental season,” Kotula says. “That may be an indicator of what is going on in the economy: There is so much competition to fill vacancies that renters are coming into contact with more flexible leasing terms.”