Everyone knows how important it is to capture asking rents from competing apartment communities. And conducting weekly market surveys is the most common practice to secure this vital business intelligence. When done right, market surveys can provide invaluable insight into whether a community's rental rates are too high, too low or competitive.
A key part of the previous sentence is found in the word “right.” Today, the vast majority of operators aren't getting market surveys right.
Too many companies use an inefficient process to compile market surveys and performance metrics. Overworked and under-prepared onsite associates conduct time-consuming phone calls to comparable properties. This process alone can take anywhere from three to four hours a day depending on the number of properties within a comp set. And let’s not forget the time needed for follow-up calls, because you know associates often aren't getting the info they need on the first call.
Once the data is gathered through weekly calls to competing properties, associates input the data they collect into Excel spreadsheets. In fact, I would venture to guess that 99 percent of properties still rely on Excel as the repository of information gathered during market surveys.
However, this use of Excel represents a significant hindrance to understanding a submarket and how a community is performing within that submarket, particularly how its pricing compares to its comps.
Here are the top five reasons you need to stop using Excel to track market survey data:
- Excel becomes unwieldy. We all do it. We adjust the column widths, the row heights, the font sizes. All in an effort to make the massive amounts of data we are inputting and reviewing easier to digest. Nothing about Excel is streamlined. Add in that Excel is not a cloud-based program so you and your onsite teams are saving and emailing each other multiple versions of the same spreadsheet. If you have one spreadsheet stored on a shared drive for everyone to use, it’s common for multiple associates to be in the spreadsheet at the same time creating saving errors and lost entries. Even if you use G-Sheets to conduct market surveys, the sheer number of sheets can become unmanageable.
- Excel is prone to user error. Excel is highly manual by nature. It requires manual data input and uses formulas that are built and maintained by multiple users. Everyone has seen data that has been fat-fingered. Unfortunately, those mistakes often aren't uncovered quickly, and it's often nearly impossible to determine who made the error.
- Excel makes it difficult to verify data. Once the data is gathered, it's virtually useless because it sits in separate market surveys – or multiple saved versions of a single spreadsheet. With data in so many different locations and files, there is no way to confirm the veracity of the data. Because we are relying on already busy onsite teams to gather and input data, the idea that someone could just change the date on the market survey yet leave the same data week after week is an unfortunate reality.
- Excel promotes a vicious cycle to mediocre data. Another unfortunate reality of using Excel to house and analyze property performance is the data is mediocre at best because of how the data was collected and its potential for inaccuracies. As such, we rarely rely on it for true decision making but aren’t taking any steps to improve the process. This means that onsite associates still spend too much time gathering data that is inadequate. In turn the data is not really used by corporate teams, who then grow disinterested in the process and don't encourage the onsite teams to do better, creating a vicious cycle of mediocre data.
- Excel is not a database. True, the software allows users to track, sort and filter data to a certain extent. But not in a way that allows operators to quickly and easily identify trends. Because of the highly manual nature of Excel, and its reliance on multiple spreadsheets, files and tabs, the ability to spot trends is very difficult. It requires real expertise and high-level, time-consuming analysis. With rents changing daily in most cases, looking one week at a time is not enough to understand how your property performed not just this week, but also for the last month, quarter or year.
What Should You be Doing
Given the considerable drawbacks of Excel, it's clear the time has come for operators to consider a more sophisticated process to collect, store and analyze asking rent data.
Forward-thinking operators are implementing third-party, cloud-based market survey database platforms and processes that automate the collection of asking rents from comps, allowing associates to concentrate on the many other tasks they have to tend to. Furthermore, modern market survey database solutions also can provide users with real data analysis, easy-to-understand reporting and true apples-to-apples comparisons between properties.
Excel has served its purpose when it comes to comp surveys. But multifamily operators are evolving and for those who haven't done so, the time has come to say good-bye to Excel.