| August 20, 2008
Like a person who adopts intelligent fitness practices in the spring and summer and then finds it easier to stay healthy when cold weather strikes, leading multifamily housing organizations are faring well in today�s economy. Operators say the effective revenue management strategies and profit optimization technology implemented over the past few years are helping them ward off the financial challenges other industries are experiencing. Multifamily executives explain that the decline in job growth nationally has impacted their business, but the loss is offset in part by homeowners entering the rental market in record numbers to cut household expenses and the increased number of renters that are postponing buying their first home. This is a constantly changing market and many multifamily property operators are relying on lease/rent strategies based on comprehensive revenue management technology that evaluates the erratic demand dynamics and provides lease/rent pricing recommendations based on more accurate forecasting. Take emotion out of the lease/rent decision A good example is David S. Santee, executive vice president of property operations for Equity Residential, who said his company is coping with a changing market by keeping a level head. �We are right on track with where we were last year with occupancy and �left to lease.� Even our down markets were not as �down� in the second quarter this year as those of our competitors.� Equity is the largest publicly traded owner, operator and developer of multifamily housing in the United States, with nearly 160,000 apartment units nationwide. Equity implemented The Rainmaker Group�srevolution LRO� revenue management system in 2006. Santee said the system helps:
Taylor said revenue management systems also help the company:
Laramar Communities, LLC, whose core business is to turn C-level properties into B-level properties and manage them in 15 major markets nationwide, is seeing many single families return to the rental scene, although in troubled markets like Florida, condos and single family homes rentals are a growing competitor. �The B product is still a fairly safe place to be, even though we�re seeing rent growth flatten in some markets,� said David B. Woodward, managing partner and CEO for Laramar. �We are carefully watching all our markets, continuing to do acquisitions, and working to maximize occupancy and maximize revenue.� Over the years, the industry has relied on various models for measuring performance:
Brains are essential Woodward and other multifamily operators agree that revenue management systems are having the opposite effect on multifamily companies naysayers predicted. �People mistakenly believe that when you implement a revenue management system you flip a few switches and everyone turns off their brains,� said Woodward. The truth is revenue management systems are at their best when used in an advisory capacity for staff, providing valuable information for weekly pricing calls between community managers and the corporate pricing office. �Laramar�s pricing optimization system requires that our entire team be more engaged with the market and our strategies on a daily basis.� One of the oldest multifamily firms in the U.S. was one of the first
to implement revenue management technology four years ago, and appreciates
the decision even more today. Simpson Property Group LP is a 60-year-old
firm that builds and operates high quality residential communities throughout
the U.S. �We track our results every year against industry advisers� REIT
indexes, and have consistently beat the REIT revenue growth numbers every
year,� said Todd Pope, Simpson�s president. �I attribute that almost 100
percent to the LRO system. We were 80 percent committed to it when we did
the system pilot test study and we are 110 percent committed to it now.
Lease/rent optimization technology is an integral part of our business
practices, regardless of market conditions.�
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