Top-notch management has never been more essential in the multifamily industry. Due to low interest rates and high unemployment, vacancy rates in rental markets soared as high as 14 percent in some areas of the country last year.
Companies are focusing on one variable that, unlike interest rates and employment, they can control: providing the best management possible. The Multifamily 50 managers are using the strength of their size to tackle daily management issues, from technology and concessions to improved customer service.
Bigger Is Better The biggest management companies say size is a huge advantage when it comes to providing exceptional management.
"We are benefited by size on the research and development front," says Dana Hamilton, executive vice president, national operations, of Archstone-Smith, an Englewood, Colo.-based company and No. 5 on the list. "There are ideas we can explore, things we can pilot, products that we can invest in, and we can share that cost among a large number of properties."
Large companies have the resources to hire employees to focus on specific aspects of the industry, like revenue management and ancillary services. "We can afford to have people who are specialized in these categories," says Gerry Spector, executive vice president and COO of Chicago-based Equity Residential, which came in at No. 2. "Instead of having one person who covers eight or 10 things, I can have people with high levels of specialization in each of these target areas."
In addition, these companies have a lot of purchasing power. AvalonBay Communities Inc., an Alexandria, Va.-based real estate investment trust, has national contracts that lower prices for products and services, from lumber to cable services and waste management. "There is some real purchasing power that can be consolidated and taken advantage of," says Timothy Naughton, COO of AvalonBay, which landed the No. 19 spot.
The Tech Front Equipped with the capital and staff to invest in new software, many large companies are switching from DOS-based to Web-based programs. "I would like to believe this is the year that lots of people adopt these new property management systems because I think they are markedly better than what we used before," Hamilton says. The company is rolling out Web-based residential management software from MRI Real Estate Solutions.
Among Web-based systems' capabilities: real-time information, integration of all software programs, and the ability to capture detailed resident information.
Companies also are focusing more attention on sophisticated pricing and revenue management systems. "Pricing is really one of the most critical levers that we have to help grow," Hamilton says. The economic downturn has heightened the focus on pricing, she adds. Throughout its portfolio, Archstone-Smith uses Lease Rent Options, a pricing and revenue management software program it owns.