The National Multi Housing Group (NMHC), a Washington, D.C.-based association that represents major apartment companies, projects that in less than a decade, 67 million Americans will be between the ages of 20 and 34, prime years for apartment dwellers. NREI spoke with David Cardwell, vice president of capital markets and technology for NMHC, about technological advances in the apartment industry. NMHC estimates that 14% of Americans currently live in rental apartments.
NREI: What is NMHC doing with regard to technology?
Cardwell: We created an initiative in 2002 to provide a platform for data transfer standards for systems applications in the multifamily space. It’s an initiative funded by the members to assist in the transfer of information. For example, data is needed to process an application for a resident that requires a credit review or a criminal history review. The application that is processing the lease and the application that is doing the credit screening and criminal check — that’s all integrated within the platform for property management.
NREI: You also have an upcoming technology conference?
Cardwell: As an association we do host the only conference focused on technology for the apartment industry. That’s in November, and I’m the person responsible for the content. That event generally attracts between 600 and 700 executives engaged in oversight and implementation of technology systems. The chief information officer, the head of operations, the head of IT, for instance, generally attend.
NREI: You conduct research as well?
Cardwell: We try to do some level of primary research each year supporting the industry. This year we will be embarking shortly on an industry survey to vet activities in the area of electronic and automated payments. That research will be completed in late summer or early fall. The intent is to get a better understanding of the solutions in the market, and how owners are taking advantage of the automation available to them. For instance, right now there are multiple ways you can pay for just about any type of goods and service. You can pay online, you can pay in cash, you can use your credit card, or you can go through PayPal. The apartment industry is no different in that regard. Our effort has really been to try and help the owners and managers get the most out of the variety of applications and automation services and technology on the market.
NREI: Does the trend include online leasing? Is that at the forefront of technology?
Cardwell: Everybody wants to talk about new developments when they talk about technology. But really what’s taking place in the industry today is the effectiveness of deployment of various applications. Five, six, seven years ago, a lot of the deployment of technology was new to many companies. Today, most companies have migrated from a property based, stand-alone application to a more enterprise-based technology platform. What that means is, they’ve migrated to a much more integrated platform of systems that are hosted centrally and used in the field. In the old days, communication from the properties to the corporate office would be on a regular, routine basis, but it wouldn’t be real time. Today it’s real time. With a lot of activities done at the properties, the property functions as a vehicle for the corporate office — for instance, with automating the leasing process.
NREI: So some of the leasing process is automated?
Cardwell: The actual execution of the lease online is still limited. There are a few companies that may try to deploy actual electronic signature and execution of the lease in cyberspace. But the reality is that you might select your unit online, but the actual execution of the lease is going to take place in person at the property. You can select, you can reserve, you can see your property — you can do all those things online. The impact of the Internet is probably most evident in the investigation and selection process for an apartment.
NREI: Managers and owners are not necessarily meeting tenants in person anymore?
Cardwell: It’s being driven by the consumer, not by the owner. That’s a question to ask the renter, does the renter need to see the apartment? My guess is yes, but they can go out and look at 10 or 11 different apartments from several different owners and managers, sit down and make the decision and execute all the activities online.
NREI: Who holds the decision-making power? Do tenants hold the clout on where they want to live?
Cardwell: That’s always been the case. The decision-making as to whether a tenant qualifies is still the same. It’s just that instead of being manual, it’s now automated. Owners can’t really reject anybody. People qualify or don’t qualify. The sales process of whether you qualify for the corner three-bedroom on the top floor versus the tenant wanting to be in a lower cost unit really hasn’t changed. That process still goes on, but the need to interface person-to-person is probably not as great as it used to be.
NREI: Are face-to-face evaluations still necessary?
Cardwell: Nobody requires that anymore. It’s all automated. Before, it used to be, you’d come in, you’d fill out a form, you’d give them your basic information. They would pick up the phone, dial into a repository, and punch in your driver’s license number, your birth date and your name. The information would come faxed back to you, whether in 30 minutes, an hour or two hours. You would call their employer, you would do all the manual background checking. Now, today that’s all automated and it happens instantaneously.
NREI: On May 27, a new report showed that apartment values recently dropped 12.2% year-over-year. Do revenue-maximizing software products help companies, and how can you evaluate which ones are effective?
Cardwell: The return on investment process is what I was driving at earlier. The industry is at a point now where they’re trying to figure out how they should best be deploying products and which ones provide the best return. There’s a lot of effort being made by a lot of companies to determine how they should be spending their dollars. NMHC does not evaluate the revenue programs. Companies have to spend their money wisely, but at the same time what we’re hearing from the market is that they’re not cutting their technology resources, they’re more judiciously applying them.