Does Your Multifamily Business Have Answers to These 5 Tough Questions?

The multifamily housing industry is one of if not the most fragmented industry in the United States. Fragmentation is characterized by the fact that no significant national housing investment vehicle yet exists that can attract capital seeking to dominate and secure national market control and gain financial synergies on a massive scale. However, capital markets and the next wave of technology driven by cultural influences will combine to consolidate and motivate the enablement of just such an ‘industry powerhouse player.’

Don’t be misled, the game is changing. We are rapidly approaching the end of business as usual in multifamily. The economic outlook for the future of the industry is too alluring for investors to ignore. Business model moves by Blackstone, Zillow, Renter.com and Greystar serve as clear evidence of this trend. Not so obvious, however, is the underlying importance of technology on executing a successful future outcome. Multifamily leaders (read, ‘survivors’) in the new era will be driven by how well they embrace becoming ‘digital at the core’.

Becoming ‘Digital at the core’ is about reducing asset investment risks, creating competitive marketplace advantages, and increasing asset values in light of the industry’s future structure. Anyone with a stake in multifamily cannot afford to ignore the impending mandate to become digital at the core.

When businesses become ‘digital at the core’ they are smarter, quicker, more efficient and significantly more powerful and competitive. When people work in businesses that are ‘digital at the core’ they secure unique advantages. They become knowledge workers that can find what they need, know, what they need to learn, do what they need to do, exactly at the right moment. And, they can take action from anywhere and at any time. The depth of benefits derived and being driven by this change are profound.

The mandate to become “digital at the core” is inexorable. It is driven by residents, workers, lenders, regulators, competitors, investors and technology itself. It is these constituencies, stakeholders and powers that make becoming ‘digital at the core’ a required strategy for survival.

The great businesses of the 21^st Century have already demonstrated what it means to become ‘digital at the core.’ This means, digital operations, digital workflows, and digital processes that permeate, and ooze within their business DNA.

Digital operations mean success, and here are some reasons why from Dr. Peter Weill, MIT Sloan School of Management’s Center for Information Research, Wall Street Journal:

ü  IT-savvy companies are 21% more profitable…

ü  IT-savvy companies make information technology a strategic asset

ü  They use their technology to reduce costs today by digitizing their core processes…

ü  IT-savvy companies use their digital platform to collaborate with other companies, customers, and suppliers

ü  It’s about the whole company thinking digitally

ü  For the IT-savvy business, there are two sources of their greater profitability: lower costs for running existing business processes, and faster innovation.

A survey of the landscape of successful companies in this digital age quickly surfaces those that have crossed the great divide, having moved from legacy data processing infrastructures to becoming truly digital at the core. By doing so they become not only highly competitive, but also highly valued. Nike, blending technology with sports shoes and clothing. JetBlue, integrating entertainment and communication technologies with air travel. DirecTV, putting advanced entertainment systems and choices in the palm of your hand. And of course there remains the ubiquitous Facebook, FedEx and Apple with its iTunes, Apple Watch and Apple iPay. Think of the success of Samsung with smartphones and smart TVs that put a seemingly endless amount of entertainment content at your fingertips. Amazon and now Alibaba that puts digital shopping and shipping and now even ‘entertainment media’ one click away for millions shoppers. And, UBER – where a ride is just a click away. Each and every one – creating and exploiting marketplace advantages by being digital at the core and gaining significant valuations and returns on their investment and innovation.

For multifamily executives, embracing the opportunity and challenges of technology, determining technology investment levels that the future will demand, might seem a bit overwhelming. It doesn't have to be.

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Drive to answer these few important questions:

1.      Do I understand how advances in technology will change the basis of competition in multifamily?

2.      What will be required in technology to meet if not exceed the expectations of residents, customers, and business partners and investors? How would you describe those future expectations?

3.      Do your current business plans clearly incorporate the role of technology as a performance contributor, knowledge differentiator, and value creator?

4.      Do your technology plans and investments clearly identify and align with your views on the threats, opportunities, and economic outlooks you consider probable?

5.      How agile and flexible are your technology plans and programs in light of rapidly changing economic and regulatory compliance conditions?

In the end, the below list of key objectives for multifamily businesses will remain sacrosanct, and, yes, they too must be kept ever in mind:

v  Asset value development via new development, acquisition and divestiture

v  Risk mitigation

v  Resident acquisition and rent yield

v  Resident satisfaction and loyalty

v  Property management effectiveness and efficiency

v  Local marketing and brand and reputational development

v  For Fee Managers: customer acquisition and longevity

Blending these objectives into a technology strategy that addresses the above suggested macro questions will help you frame out a path forward.

The point is, that it will be technology that frames the future successful industry business models. Not just for the efficiencies technology can deliver but more importantly for access to the ‘knowledge’ that drives sound, risk mitigated decision making and operations.

As always I am here to help. If you would like me to lead a team session to help formulate your strategic technology planning send me an e-mail at: mike.radice46@gmail.com or call me at 603-580-5497.