Strategies to Excel in Multifamily Lease-UpPosted on July 11th, 2021
The lease-up of new build multifamily communities is a crucial time for the ownership of the asset. The strategies we recommend generate lease-up results that out-perform the market averages.
The REMM Group has extensive experience in leasing up multifamily communities in Southern California. That experience includes the lease-up of The Enclave in Otay Ranch, The Roy in Los Angeles, Meridian at Phillips Ranch, The Link in Glendale, The Trails at Canyon Crest and Lincoln Village in Riverside. We are now preparing marketing for the launch of Citron Apartment Homes in Riverside.
A Successful Lease-Up Requires Passion, Dedication and Strategy
The National Apartment Association says one of the ten things you need to know about lease-ups is that they take, “Work, work, work.” The strategies we outline take even more work. That is why it’s necessary to have a team with the passion and dedication to put in long hours and go the extra mile.
That energy must be focused into meaningful action with clear strategies. The REMM Group has found that a best-teams approach, action based on the analysis of daily lease-up reports, and a responsive marketing plan make a dynamite strategy.
Using this strategy, the REMM team was three months ahead of the proforma for Lincoln Village. The success of these lease-ups led to the sale of Lincoln Village and The Trails at Canyon Crest in Riverside just a year after leasing began.
Real estate investors need to meet their financial and budget goals. The ideal team will want to exceed those goals and expectations.
Start with the Best Teams Approach
A management company must have a deep talent base to put their best people at a lease-up. The REMM Group’s focus on talent development, dedication to training, mentoring, and rewarding performance means we are constantly improving our talent pool. The REMM Group is ranked as The Best Place to Work in Multifamily in California.
A deep pool of talent, and the willingness of associates to be flexible and take on new challenges, will allow a management company to put the best managers, leasing professionals and service manager at a new build for lease-up.
This strategy also requires involvement from senior management professionals. These more experienced team members will further drive the performance of each new build. At The REMM Group our team includes CEO, Sara D’Elia, a Senior Regional Property Manager, our Marketing Director and me, The Director of Multifamily. We all spend time on site at the lease-up. More importantly analyze the lease-up performance every day.
Analyzing and Adjusting the Lease-Up Performance
Onsight teams need to communicate detailed information to this senior management team regularly. REMM developed a detailed tracking report for the onsite team to fill out and send daily to the management team. Because the managers have a broad understanding of the market, they can analyze the lease-up data to maximize the financial performance of the community.
Whenever the team sees there are opportunities to reduce discounts and increase revenue, as decision makers, they can act immediately to adjust rates. That action can be extremely specific depending on the reports.
If one-bedrooms are leasing the most rapidly the management team may raise those rates or reduce concessions while leaving the two and three bedrooms unchanged. The team may even drill down further. If there are three models of one-bedrooms and one is more popular they can raise the rates on just that style unit.
This calculated, adjustable strategy allows REMM to maximize how much we can lease an apartment for. This increases revenue significantly for the asset owner over time. As an example, during The REMM Group’s lease-up of Lincoln Village, we increased the market rents over 13% and keep in mind—that is while observing all COVID19 restrictions and protocols.
Balancing the Absorption Schedule with Concessions in Leasing
Blanket decisions regarding rates and concessions overlook revenue opportunities. With oversight and a targeted response, you can meet or exceed the absorption rate while optimizing rental rates. If the absorption schedule is on track, you can hold or raise rates. If the lease up begins to lag, immediately offer targeted concessions, only expand these offers if the market demands them.
To be this responsive, key decision makers must be intrinsically involved in the lease-up process. It takes knowledge and experience to understand all the factors that may be affecting the lease-up and separate trends in the market from blips that pass quickly. Our team are experts in the market, they can make rapid decisions to change rates and concession with the whole market in mind.
Using these thoughtful leasing strategies and adjusting rates proactively, keeps the lease-up on track with the absorption schedule without giving up multiple months of free rent.
Strategic and Responsive Lease-Up Marketing
Lease-ups require a responsive strategy of marketing placement and messaging. We adjust our marketing according to our lease-up progress and the market. Again, it takes experience to understand what the leasing numbers are indicating in relation to the marketing placements. That’s why having our Marketing Director involved is important to The REMM Group.
Ads need time to work, however the success must be monitored, so money is not thrown away on media or messaging that is not being successful. Markets, time of year, type of property and many other factors mean that the same plan that worked on one property may not be the best for the next one.
We strategically adjust our geo-fencing, increase, or decrease google ad placement, use, or don’t use out-door media all according to the results we are monitoring. This gives us marketing with a high rate of return and that keeps marketing expenses down and NOI up.
We generally stay under the average expenses for marketing lease-ups in the multifamily industry for our area with this proactive approach. We concentrate our clients’ money in areas that work for the community.
Local Market Analysis
It’s important to note that the analysis and adjustment to rates or advertisements needs to be based on the area’s lease-up market, not just your property. We analyze our progress compared to other lease-ups in the market on a weekly basis.
Our onsite team shops what type of concessions are being offered. We compare how much traffic we and our competitors each have, what people are looking for, where are the coming from, and how many leases each property has had in the previous week.
Southern California is The REMM Group’s home, we have been participating in this market for over 40 years, our understanding goes deep.
Over Performing in Service
If you want to outperform the lease-up market, you need to overdeliver on service.
The multifamily owners we work with create beautiful properties to lease-up. They provide what residents are looking for. We manage those communities in a way that adds additional value. Even during the COVID19 pandemic we found ways to continue providing apartment seekers with an excellent experience and good feeling.
This is key to lease-up success. The REMM Group’s Yelp, Google, and Apartments.com ratings beat the market even as we increase revenues for our owners. Residents need to feel that any additional cost is small compared to the quality of service they receive or ratings will suffer and apartment seekers look at on-line ratings.
Lease-Up Strategy Backed by A Passion
Apartment seekers expect to have the phone answered. The cheery voice of our leasing agent and the accommodation and flexibility they provide in setting up the resident’s tour is that little something extra that impresses renters. It’s the beginning of all the feel-good extras our “best teams” provide onsite because they are passionate about what they do.
Owners and investors in new multifamily properties expect management to meet the proforma financial projections. Our team realized if we looked at the data daily, we could do more, we could adjust rates and concessions with the goal of beating the proforma. That desire to exceed expectations is at the core of our corporate culture and our team members.
Every team member at The REMM Group knows if they have an idea to improve leasing, make the resident’s experience better, decrease expenses for the owner, or in any other way, add value to one of our multifamily communities, we want to hear it. We reward that dedication and attention.
Thus, we return to the point that none of these lease-up strategies will work without a passionate team. People that go beyond what is expected to create value are essential when it comes to over-preforming during lease-up and beyond.