As we close out 2016 and look ahead to 2017, I can’t help but reflect on what I think some of the key multifamily trends will be. We make more of deal about the change from Dec 31 to Jan 1 than any other change from one day to the next, which in some ways makes for an artificial sense of “newness.” Yet at the same time, it’s useful to collectively assess where we are, where we want to go and what will help or hinder us on that journey. Here’s some thoughts on what I think will be some hot topics for 2017:
1. Soft or Hard Landing.
No one disputes that we are past “peak YOY revenue growth.” The question is whether we can settle into several more years of near-historic growth or whether we will hit a national rental recession (we already have market recessions in cities like Houston and San Francisco). Since my crystal ball is particularly hazy on this one, I fall back on the mantra, “Hope for the best, but plan for the worst.” I recently blogged on ways to deal with a down market, so check that out.
2. Rising Customer Expectations.
It’s happening in every industry and ours is no exception. A combination of increasing disruption from technology and continued growth of affluence in major markets. Think about it. Last time I was in New York, I was amazed at how clean the taxi that I rode in was. Then I realized they had to literally clean up their act now that they’re competing with Uber. And for all the talk of getting rid of Sunday U.S. Postal Service delivery, they’ve actually ADDED Sunday door-to-door delivery for Amazon. Even the airlines care in ways they never did before. I recently had a lengthy mechanical delay with United Airlines. By the time I landed, I already had an email with an apology and a travel certificate for a future flight…and I hadn’t even complained. What are you doing to up your game?
3. The Year of CRM?
It will probably take longer than I wish to get to full adoption, but I think 2017 will be the year many operators realize that a) they have a real problem with ensuring disciplined prospect management, b) the problem is worth solving now and c) there are credible, off-the-shelf solutions. In many ways, we’ve ridden the “rising tide” of the current MFH bull market and ignored what we know is a weak part of our management playbook. I think the combination of robust marketing from the new entrants in the space (really more “new-ish” since they’ve now been around for about two years) and pressures from the growing challenge of finding strong rent growth will combine to get many operators to take a serious look at CRM this year.
4. Embracing a Post-ZMOT World.
I’ll stop talking about this when the industry finally embraces the realization that prospects are typically 65% or more of the way to their decision before they ever visit us. We are now the curators of, rather than the gatekeepers to, information. Intellectually, we all get this, but the sad reality is that we still use old school sales tactics that were built on an information asymmetry that simply doesn’t exist anymore. A few leading-edge companies have embraced this and completely changed their approach with great success. Will you join them in 2017?
5. Will We Get the Basics Right?
Will we get the basics right or continue to be distracted by new, shiny bangles. There’s a lot of cool, new stuff out there. Smart home technology, the latest in social media marketing, the sharing economy, electric car charging stations, etc. The list goes on, and there’s definitely a place for all of that. My concern is that we invest in these “new” things while totally neglecting core business functions that may not be sexy but work. One example is email re-marketing. Just two years ago, we did a study of 31 leading operators and found fewer than 10% had any regular re-marketing drip campaign. We’re going to re-do this study in 2017. How will you fare if you’re on our list?
As I think towards 2017, I’m reminded that, much as I wish success in multifamily operations was just about finding those one or two things to do 100-200% better than the competition, it really is about doing 100-200 things one to two percent better than the competition. A well-organized, disciplined portfolio of projects building your operating platform will surely succeed better than swinging for the fences on one or two projects. Here’s to an exciting 2017!