Pressure Is On For Property Managers Tasked With Challenge Of Maintaining Profits

Multifamily owners, after years of rent increases and record-breaking demand, have come face to face with a new reality in recent months, and as revenue cuts get deeper, the industry is going through a transition as it looks to balance cost-cutting through automation with supporting employees doing tasks that only humans can perform.

“Property management is going through a transformation,” said Doug Brien, CEO and co-founder of Mynd, a tech platform for residential investment properties. “This is not a business that's ever going to be fully automated. There’s always going to be people involved with property management.” 

But that isn’t stopping a myriad of tech firms from trying to automate or assist with various aspects of the job. Well-publicized trouble finding staff for property management roles, which became more burdened with additional responsibilities and technology during the pandemic, as well as shrinking profit for multifamily operators, has put pressure to squeeze every last cent out of overhead and staffing costs via technological adaptation.

“We have to optimize some of these business operations that we weren't optimizing for, because there was a natural tailwind in the industry,” Zego President Mark Peters said. He says firms like Blackstone and Greystar have been big investors in new technology.

According to SmartRent CEO Lucas Haldeman, whose firm makes an industry-leading apartment management platform, property owners face the end of years of rising rents, suddenly need to cut expenses, and turn to technology. When mortgage rates go up, they go up for apartment owners as well, so owners are increasingly fixated on ROI.

Haldeman hasn’t seen big layoffs in the industry yet, but he does feel there’s been a record scratch moment as owners realize the challenge in maintaining profits. In recent months, owners are reluctant to get out the checkbook unless it helps cut costs, and with less profits, maintenance may be deferred, adding more work for property managers. 

“They’re all experimenting with technology to some degree,” National Multifamily Housing Council Vice President of Business Strategy Sarah Yaussi said about members investing in more proptech. She noted Equity Residential, for instance, which has found great success in using technology to allow maintenance teams to work across a local property portfolio and do more with less.  

“Automation with centralization is going to get them pretty far,” she added. “But there’s also a learning curve to make it seamless and frictionless. But I think that’ll help alleviate some of the challenge.”

The nature of property management, days filled with rote, routine jobs that aren’t celebrated but are nonetheless crucial, hasn’t offered a great sales pitch to new workers. The average age of workers in the industry, 47 according to analysis by Zippia, suggests as much. 

A November survey of property managers by the National Apartment Association found 74% of respondents felt the job damaged their mental health, and 58% said it damaged their physical health.

One-quarter feel extremely dissatisfied with their salary, and a recent survey by Parks Associates and GE Appliances found nearly half of multifamily owners and property managers find it either difficult or very difficult to hire new maintenance staff, while 45% find it either difficult or very difficult to retain workers once hired.

In this situation, little things can continually add to the stress and strain of the job, and those little things have piled up and become more complex in today’s changing multifamily landscape. 

For example, in addition to newer challenges like package management and the explosion in new technology, on-site staff find that preventive maintenance has become a bigger challenge, since remote work means fewer units are empty and accessible during the day, Yaussi said. The growth in EV charging in multifamily buildings means one more thing to worry about, one more hassle and complaint to solve. It’s not one massive issue, it’s a collection of smaller annoyances. 

“We’re hearing from members that, on an operational level, there’s labor issues, it’s hard to find people, difficult to keep people, they want more money,” Yaussi said.

Mynd’s Brien, whose firm focuses on managing residential property for investors, argues that it’s important to bring in staff from outside of the industry; an increased demand for investment property will mean more need for professional, tech-savvy property managers. Some operators are struggling to find experienced hires. 

“​I always say that property management is not the deepest, or best pond to fish in for talent,” Brien said. “For all the reasons that we're talking about, it's like people that have just continued to do it, because that's what they did. And that's kind of all they can do. And that's painting with a very broad stroke, and probably somewhat unfair, but like, it's kind of true.”

Alleviating workplaces issues remains challenging, especially as expenses increase. Based on public filings, year-over-year property management expenses went up for Equity Residential, UDR and Essex Property Trusts, despite their making investments in automation.

This has led these firms and many others to double down and invest more in this technology. Any savings are considered in the current environment, especially virtual tours and marketing and sales assistance that can fill empty units and maintenance assistance that centralizes work and allows repairmen to cover more ground.

Plus, residents like places with high-tech additions and are willing to pay more for them. Steve Sisson, president and CEO of Vita Residential, told GlobeSt that investment in smart apartment tech led to a 40% return on investment, and residents willing to pay up to $55 more per month. Data from SmartRent found that smart home automation can save landlords up to 30% on utilities and staffing costs and increase rent by $100 a month.

The proliferation of AI, and the hype and money behind the technology, has led many to assume that will be a massive area of growth, and that increasingly sophisticated chatbots will help streamline customer service and maintenance tasks in particular.

A 2022 study by Real Foundations offered some support for the notion that chatbots have helped tenant recruitment; 56% of property website traffic occurs after hours, and doesn’t get a response without an embedded chatbot, and industry surveys revealed that chatbots result in higher-quality leads more likely to lease, can save roughly 50 hours a week for property leasing staff and reduce marketing spend. 

Last year, apartment REIT UDR decreased its leasing staff by 40%, leaving open roles unfilled, and instead invested in staff raises and more technology. The company claimed on an earnings call that the move increased customer satisfaction by 24%.

Perhaps more suggestive, the research noted that a quarter of tenants find an apartment without setting foot in it, underscoring the value of digital tours and outreach, and that self-guided versus guided tours tend to convert at the same rate.

As the job requires more flexibility, employers are offering property managers and leasing agents more flexible hours, Yaussi said. The reality of the labor shortage demands that kind of response. 

Technology will definitely play a role in fighting the industry’s longstanding labor issues. But the challenge will be doing so in a way that helps, instead of frustrates, existing staff, Haldeman said, and helps them find more long-term satisfaction and career growth in the position.