The multifamily industry at one time held fast to a localized, low-tech approach to doing business. As an industry historically driven by face-to-face relationships and building-by-building knowledge of a specific market, many veteran professionals diminished the importance of the new Information Age. But today, the multifamily industry has risen to the challenge, finding that it can do business more efficiently and effectively with technology and sophistication on its side.
Admittedly, a major catalyst behind the multifamily industry's evolution was a keen desire to access the institutional investor market. To meet the demands and expectations of these more sophisticated players, the multifamily industry has strengthened the balance sheets of individual properties through targeted marketing programs designed to reduce tenant turnover, directed considerable attention to producing more advancedmodels and reporting systems and enhanced and improved both property and asset management operations through technology.
One of the key criterion ofinterested in the multifamily market is management quality. They, and other sophisticated owners, having felt the pain of nonperforming assets, are taking a more pro-active role in the strategic decision-making process of their properties. The multifamily market anticipated and responded to that need in several ways.
One way relates to actual property development. Amenity packages and building material quality have improved substantially over the past decade. Smart buildings, a concept traditionally reserved for commercial buildings, have been introduced in the multifamily market, allowing for the creation of a true live/work environment at home. Amenity packages, geared to varying age groups, lifestyles or income classes, allow for differentiation between units or properties or even geographic areas. In addition, building materials and styles have changed. Focusing on the long-term viability of their properties, developers now elect a "classic quality approach" torather than building to stay on top of short-lived trends.
Another way that the multifamily industry has become increasingly sophisticated and competitive is through a more scientific approach to overall marketing efforts. Evidence of this is seen in targeted marketing programs designed to not only capture tenants, but retain them, thereby significantly reducing the turnover rate. A lower turnover rate is a crucial component to healthy operations as it can be the most costly part of maintaining a multifamily. By conducting thorough research on a select geographic area and developing a detailed understanding of that area's demographics, the multifamily industry now introduces properties with amenities packages that appeal to the market and then implements targeted marketing programs to effectively reach those tenants and further compel them to stay.
Finally, in addition to the significant advancements in property development combined with sophisticated marketing programs' the multifamily industry and its investors have benefited from the infusion of advanced information technology in both the property and asset management areas. This has not only resulted in greater productivity and efficiencies, but it has enabled the industry to deliver far more than quarterly "cookie cutter" financial information to investors. In fact, intelligent use of technology has allowed the multifamily industry to generate customized financial reporting when investors need it.
Certainly we, as an industry, continue to find new ways to operate more efficiently in order to improve overall performance results, particularly on behalf of our investors. However, these examples are a strong indication that multifamily is a sophisticated and viable asset class worthy of institutional investor attention.
Georgia Murray is senior vice president of Boston Financial, a Boston-based firm that is a member of the Executive Committee of the National Multi Housing Council Board of Directors.