Like any good regional manager, Laramar Communities' Paul Hyams thinks about pushing rents every single day. He meets with property managers every two weeks to set rents, and he expects that those managers shop at least two competitive properties every month. At the 1,432-unit Fillmore Center in San Francisco, Hyams is seeing near 100 percent occupancy and consequently has an eyebrow raised, wondering if Laramar's rents there might be too low.

“Rent and vacancy management has always been a catch-22,” Hyams says. “Occupancy means everything, and you want to be full up. At the same time, when you are full up, you'll be questioned on your rates. But if you're only at 94 percent full, people are going to get on your case about occupancy.”

Over the past five years, managing the numbers behind yield management—the process of simultaneously maximizing both occupancy and rents—has been a no-brainer for Hyams and virtually everyone else involved in for-rent apartments. Vacancies have hovered at historical lows, and average rents have never been higher. That ride may be coming to an end, though, and industry observers say property managers could do well to pay closer attention to the discipline of crunching numbers and finding the magic medium between over-occupied and not-full-enough.

“The biggest vacancy declines in the U.S. apartment market have come and gone already,” says Michael Cohen, a research strategist for Boston-based investment research firm Property and Portfolio Research. “It is worth noting that apartment vacancies are at a five-plus-year low point, but the backdrop is beginning to shift. Supply is going to pick up, and we no longer have the condo conversion trend at our backs. That is what owners need to be paying attention to in terms of yield management and how they are going to push rental rates.“

In addition to daily discussions and bi-monthly meetings, the Laramar team is beginning to probe new strategies for adding to NOI while still keeping rates marketability attractive to the San Francisco rental set. “There's other things you can do besides push the rents” to add to the bottom line, Hyams says. In particular, Laramar is having some success with unbundling services and amenities from the base rent and up-selling those perks (along with their associated fees) into the rental agreement. Increased deposits, pet rents, and parking space fees have all been identified as possible areas at the Fillmore Center where additional operating income can be gleaned without jacking up advertised rents.

SURVEY SAYS The unbundling tactic, in addition to frequent move-in rent concessions, means that property managers content with a mere cursory survey of their submarket conditions are likely missing out on key yield management metrics. While a quick spin on the Net or a couple of cold calls can get an enterprising property manager some competitor quotes, they often do not reveal some of the subtleties of the real transactions going on at the leasing office across the street.

“Typically we won't rely on phone surveys. That's just a song and dance, and we want the nitty-gritty,” says John Carlson, an asset manager for Scottsdale, Ariz.-based developer and fee-management firm Mark-Taylor Residential. On May 10, Mark-Taylor assumed management of the ColRich Group's 272-unit San Ventura apartment complex in Chandler, Ariz., and yield management was an immediate focus. “That process begins prior to any management takeover,” Carlson says. “The manager that takes over the property will go shop each of the comps that we deem comps prior to takeover. We factor in concessions, and we often find that properties are priced incorrectly or undervalued in the sense of premiums.”

Those premiums could include the views from the third floor, the cooler Arizona summer temperatures on the first floor, the proximity to the pool or clubhouse, available balcony or patio space, or even simply being the next unit available for rent. “The best unit gets the best price,” advises Carlson. “When you rent your best unit, the next-best unit doesn't sit idle in pricing. That's the best unit now, so spike the price.” Carlson also subscribes to unbundling services and amenities, and he expects that in a good apartment market, a scrupulous property manager should be able to annually add $700 to $750 per door on additional fees.

Back at the Fillmore Center, Hyams and the rest of the Laramar team have been considering a move to electronic revenue management, a service offered by firms such as Rainmaker, RealPage, and Yardi (see “Little Black Boxes,” below). A universal component of the hotel, airline, and hospitality industries, revenue management generates automatic pricing based on user-defined metrics and historical market data. Adoption in the people-centric leasing arena of multifamily has been somewhat slow, but the pressure of a softening rental market might have property mangers like Hyams looking to technology to manage the ever-increasing array of yield management metrics.

“The game is to find the happy medium, and we'll use all the tools at our disposal,” Hyams says. “We value our residents, but this is a business, and if I can make another dollar on rents, I will.”

Editors Note: NMHC is hosting a members-only Webcast on revenue management software July 12 featuring current users who will offer their insights and best practice recommendations. For information, contact Lauren Dwyer at or 202-974-2387.