Apartment executives are planning to spend only moderate amounts of money on high technology in 2006, but they are looking for those dollars to deliver the maximum productivity and products with greater features than ever before.

A new survey of apartment executives shows that these professionals are looking to continue integrating their business- and property-management software systems. They are also conscious about costs for implementing and maintaining software.

In March, Apartment Finance Today surveyed 465 multifamily owners, developers and property managers to learn about their current and future needs for software, and to update the findings from our first technology survey in 2005. We asked about their spending plans, priorities, decision-making processes, and satisfaction levels with their technology vendors. The results show they expect technology to play a critical role in the efficient operations of their companies, as they increasingly adopt property management technology that is deeply integrated with their accounting, leasing and screening, and reporting systems.

Who’s got the power?

The person deciding whether to purchase software, as well as which software and how much to pay for it, tends to be the executive leadership in the apartment firms responding to our survey. That matches a similar evolution in non-real estate firms in the past six years, in which technology purchase decisions moved out of the realm of the IT department and became a responsibility of the business executives.

The degree of top-level executive involvement in purchase decisions varies according to the category of the software or service, but high-level company officers were always the most-involved group.

For example, 69.3% of the owners, principals and developers were involved in deciding which vendor is chosen to deliver telecommunications, Internet, satellite and cable TV services, as were 24.7% of the CEOs and chief operating officers (COOs) and 13.9% of the chief financial officers and controllers. Only 12% of the respondents indicated this was an IT department role.

Top-level involvement in choosing these vendors is clearly necessary because about 90% of the respondents indicated that such communications services were important or very important to the marketability of their properties. Slightly more than half of them expected to spend up to $19,999 on these communications services in 2006, 17.4% expect to spend between $20,000 and $49,999, 7.3% expect to spend between $50,000 and $99,999, and 6.5% expect to spend $100,000 or more.

Property managers played an understandably prominent role (40%) in helping to select leasing and screening software, but owners and principals still topped them at 54.9%, followed by CEOs and COOs at 26%. Perhaps the most surprising figure was that only 24.9% of the property managers reported being involved in choosing the property management software.

The elephant in the room

Property management software continues to be the core technology that concerns multifamily executives, which in no way discounts the importance of leasing and screening services or telecom offerings. Property management tools are at the front line of the business while increasingly tying into back-end financials systems and internal reporting processes.

Most of the respondents (80.2%) planned to spend less than $20,000 on property management software (see table below).

More than three-quarters (76.8%) of all of the respondents reported being personally involved in the decisions to purchase property management software. This included 62.1% of the owners or principals in their firms, 34.8% of the CEOs or COOs, and 34.4% of the chief financial officers, asset managers or controllers. Again, less than a quarter of the property managers have a say in choosing the property management technology.

For the second year in a row, respondents were generally quite happy with the property management systems they had in their companies. We asked our survey participants to rank their satisfaction level with their existing property management software, using a scale of one to five, with one being least satisfied and five being the most satisfied. In 2006, 38% of respondents answering this question ranked their happiness a four; 35% ranked it a three; 11% ranked it a two; 9% ranked it a five; and 5% ranked it a one. The results were similar in 2005.

The survey asked which property management software they were most likely to consider purchasing. Respondents indicated an increased interest in a number of property management software products. In fact, most of the products listed ranked higher in 2006 than in 2005. Yardi Voyager, whose interest level grew to 35% from 31.4%, led the field, but respondents showed increased interest in considering the purchase of many others, too. Domin-8’s Paradigm product more than tripled its interest level; Realeum’s Foundation doubled its level, and SS&C’s Skyline Residential almost doubled its level.

In 2005, respondents called for more features and integration in their systems, and in the intervening year, vendors have rolled out a series of new features, and have even bought other companies with the aim of acquiring their customer bases and expanding the features and services available to all of their customers (see page 30).

In 2006, the reliability of property management systems was a strong priority in choosing a solution – 58% said so. Nearly half (48%) listed ease of integration with other systems as a priority; 48% also selected ease of use. But costs were top-of-mind: 61% said implementation costs were very important, and 60% said IT maintenance costs were very important.


ON THE WEB:

Where to go on the Internet for more information and tools for the apartment industry:

National Multi Housing Council technology resources (www.nmhc.org/Content/BrowseIssues.cfm?IssueID=13): A good site for information on multifamily technology trends.

PikeNet (www.pikenet.com): An often broker-centric source of technology trends in commercial real estate, with an emphasis on marketing tips.

The Site to Do Business (www.stdbonline.com): A membership site with demographics information, construction reports, flood zone maps and more.

About the respondents

The 2006 Apartment Finance Today technology survey drew 465 participants, a healthy increase from the 415 who responded to the 2005 survey.

Nearly half (46%) of the 2006 respondents held the title of principal, partner or owner, with an additional 11.6% serving as president, chairman or CEO of their firms. The next largest category – 13.5% of the respondents – held executive vice president or senior vice president titles, and the remainder were directors, managers or held other titles.

Fifty-six percent of the companies were property owners and operators or developers. The next biggest category was diversified real estate firms at 10.5%, followed by property management firms at 9.9%. Builders, asset managers and others made up the remainder.

The companies tended to be entrepreneurial: 43.7% had fewer than 10 employees in all locations; 15.6% had 11 to 25 employees; and 18.4% had 250 or more employees.

Purchasing reasons

What are/were your company’s business reasons for purchasing property management software? (253 responses in 2006; 320 responses in 2005)   

 

2006

2005

Executive decision-making

37.2%

42.8%

Asset utilization/maximization

40.7%

42.5%

Maintenance management

40.3%

41.6%

Cost containment

29.6%

39.1%

Growth management

44.3%

37.5%

Compliance

22.9%

24.1%

Other

5.5%

15%

Product features

What product features are you most interested in having in a property-management software solution? (253 responses in 2006, 316 responses in 2005) 

 

2006

2005

Property and lease-record management

77.5%

76.3%

Lease administration/processing

64.4%

66.8%

General ledger/budgeting

70.4%

63.9%

Accounts payable

60.1%

59.8%

Asset management

55.7%

56.3%

Executive reporting/business intelligence

53.8%

54.4%

Work orders and preventative maintenance

58.5%

53.5%

Project management

50.2%

50.3%

Credit checks

42.7%

44.3%

Web-based

46.2%

37.7%

Criminal background checks

34%

36.4%

Purchase-order module

33.6%

27.5%

Dynamic pricing of units based on market environment

24.1%

27.2%

Payroll module

27.3%

25.6%

Wireless

16.6%

13.6%

Other

2.0%

7.6%

Software products

What property management software company’s products are you most likely to consider purchasing in the future? (223 responses in 2006, 258 responses in 2005)

 
2006
2005

Yardi (Voyager)

35%

31.4%

RealPage (OneSite)

17.9%

23.6%

Intuit/MRI (MRI Residential)

24.2%

22.5%

Property Automation Software (Tenant Pro)

20.2%

16.7%

Sage (formerly Timberline)

9.4%

14.7%

Classic Real Estate Systems

13.0%

10.1%

AMSI/GEAC

12.1%

9.7%

Rent Right

10.8%

7.0%

SS&C (Skyline Residential)

6.3%

3.9%

Realeum (Foundation)

4.5%

2.3%

Domin-8 (Paradigm)

6.7%

1.9%

Other

20.2%

23.6%

Source: Apartment Finance Today March 2006 and January 2005 surveys of multifamily owners, developers and property management companies.