For some time now I have been predicting that the
multifamily leasing world would be turned upside down. What was previously driven
by landlords will now be driven by consumers.
Multifamily had been orienting
itself around a leasing model that is now about to begin to crater. The
conventional model has been one whereby a potential renter must present
themselves (read expose themselves to a sales pitch) either in person or engage
via a property web site conducting ‘one to one’ negotiations. Potential renters
were held, understandably so, captive to having to make an on-site visit,
completing a guest card and ‘getting the pitch’ one property at a time. An effort
they find increasingly exhausting in the digital age.
Today’s tech savvy consumers demand control over their time
and effort. They want speed – driven electronically. They want open options. They
want leverage. They don’t want to make physical visits, have meetings, schedule
appointments, wait in line or negotiate terms. We all have seen the power of
these consumer driven drivers in industries like insurance, hotel bookings,
taxis or car rentals for example. We are now seeing this same consumer driven model
gaining traction in apartment rentals.
The consumer driven leasing business model is simple. Consumer
goes on-line, completes an application, specifies the credit bureau to be used to
get a credit report so as to protect their personal information and sends the
application to the leasing property for acceptance. Over to the leasing agent –
accept or decline the application?
The ‘Priceline style web sites’ for generating competing
‘bids’ from multiple property options regarding a rental are also starting to
appear. On the surface the business model is also simple. A potential renter (consumer)
spies an acceptable property and launches an ‘active competitive open bidding
process’ against other properties which are also acceptable choices. Game turn
is now over to the ‘electronic leasing sales agent’ to bid, compete and the
game plays on.
The issues in front of multifamily business leaders and
technologists in this new era are significant.
First will be the necessity for
determining IF and how to participate. Major policy decisions will be required.
Skill and systems development surrounding the ‘leasing agent’ interactions with
such gaming/bid systems will be paramount. How will open disclosures of terms
and concessions effect local and industry rent yield ‘pricing’? How much will
you pay to play in this new game?
The issues in front of the technology leaders will be the
‘integration’ of what will become a super hyper-active, real time data stream
of inventory, active bids and pricing surging at you from multiple consumer bidding
sources.
The above examples are only a very few of the emerging
strategic elements to be considered.
The fundamental drivers are threefold:
First, we all must recognize that this is the age of seeming
unlimited access to the information we need to make choices and decisions. Physical
is replaced by virtual. Virtual visits are already replacing the need for
on-site persuasive sales pitches. The quality of the information being made
available by the ‘property web site’, by ‘social media’, by Google Satellite
views, etc. and soon by ‘bidding engines’ will carry the day.
Secondly, as I have also stated previously this is the age
where for multifamily, ‘going digital at
the core’ is an inexorable force (I
have a white paper available by request on this very subject) one that will
need to be met by multifamily. Only the ‘digital’ will prosper.
Thirdly, consumer desires always win the business model
design contest.
We will see a significant ramp up of these new leasing models
– you can bet on their popularity, and success.
As always, if I can help further in grappling with these
issues just send me an e-mail at Mike.radice46@gmail.com.
I’d be happy to help.
Mike
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