Inflation is impacting the multifamily industry, with 76% of apartment professionals ranking operational efficiencies as the top rental housing challenge this year, according to the National Apartment Association’s (NAA) 2023 Property Management Industry Pulse.
Conducted in April and sponsored by AppFolio, the survey also finds that 61% of respondents ranked maximizing revenue and profits as the second top challenge, followed by 42% who cited HR, staffing, and recruitment as the third top issue.
This year’s survey results reveal a change in attitudes on the industry’s most pressing concerns. Two years ago, when the industry was seeing unprecedented rent growth and demand for apartments, 74% of property management professionals ranked HR, staffing, and recruitment as their No. 1 challenge, followed by operational efficiencies, 63%, and maximizing revenue and profits, 48%.
“Across the country, monumental cost increases—from insurance premiums and utilities to property taxes—are impacting operations for housing providers who by and large operate on narrow profit margins,” said NAA president and CEO Bob Pinnegar. “This year’s survey importantly elevates the voice of property management companies and provides important takeaways for the kinds of solutions the industry can implement to ease these challenges and remain viable for generations to come.”
Related to operational efficiency, 57% of respondents cited reducing costs as the most challenging activity, followed by finding high-quality vendors and suppliers, 41%; tracking projects and vendors/suppliers effectively, 40%; and freeing up team from labor-intensive processes, 40%.
When it comes to maximizing revenue and profits, navigating rising inflation pressures was cited as the most challenging activity by 47% of respondents. Increasing occupancy rates, 39%, and retaining current renters, 37%, came in at second and third, “typifying a period of cooling demand amid rising costs,” according to the NAA.
While HR, staffing, and recruitment slipped to the No. 3 biggest challenge this year for apartment professionals, attracting new team members, training new hires quickly, and reducing staff turnover remained the most challenging activities as was the case in 2021.
“Inflation has spoken loud and clear in this year’s survey, touching many of the industry’s most pressing challenges,” said NAA vice president of research Paula Munger. “This doesn’t mean that the industry’s labor woes have disappeared, but it is a testament to the impacts of a high interest rate and high inflationary environment.”
The survey respondents also were asked what they would need that they currently don’t have to help solve their biggest challenges. Needs comprised talent pipelines to include more trade schools; employees to fill open positions; a strong voice at the local, state, and national levels; and real solutions, such as public-private partnerships, for affordability issues.
Regarding technology, respondents are looking for solutions that help balance on-site productivity without risking resident satisfaction; better fraud protections; and access to actionable data of all types.