How to Stay Competitive in New York’s Fast-Changing Multifamily Market
The real estate industry is notoriously slow to embrace technology. However, a new generation of well-informed and highly discerning tenants is forcing landlords’ hands.
Even as recently as 10 years ago, a multifamily landlord’s job was done as soon as a prospect signed on the dotted line. The renter would then, for the most part, be on their own — responsible for navigating apartment issues and maintenance needs to the management office. It goes without saying that today’s renters, many of whom are millennials and Gen Z, would deem this hands-off approach simply unacceptable.
This seemingly simple shift speaks to a broader evolution happening across the entire rental process, with the most successful owners and operators doubling down to become more service oriented and tech progressive. The savviest landlords will go one step further, investing in teams of in-house coders and technologists to provide residents with concierge services for anything, from anywhere.
A focus on customer service is now an expectation, with even the terminology gradually shifting over the last decade to accurately describe the true landlord-occupier relationship. Tenants became renters, who became residents, and now finally, we can truly say they are customers. This is due in large part to the reality property owners and managers must consider if the services they’re providing are on par with a tenant’s investment.
This value equation is growing increasingly important, as rents have consistently risen at record-breaking rates. In May of 2022, Douglas Elliman reported that median rent in New York City had reached $5,000 per month. That means renters are investing roughly $60,000 into rent every year, and this trend will only continue as barriers to owning a home increase. The average age of homeowners also continues to rise, according to the National Association of Realtors. The median age of all homebuyers also reached 47, compared to a median age of 31 in 1981. Therefore, renters have become customers paying a premium for a luxury product — and they expect landlords to provide luxury service along with it.
Successful decision-makers and leaders are noting this shift and beginning to look at their real estate assets as vehicles to deliver lifestyle as a service. The most successful ones, however, are using real estate tech to augment their client experience, beginning at the apartment showing and continuing throughout the duration of the lease. Picking the right vendor is often the deciding factor between a successful tech integration or a flop. Proptech providers are constantly pitching real estate owners the best tools for streamlining day-to-day operations, but the key is to focus on services designed to drive a phenomenal resident experience.
The resident experience begins long before the renter moves in. Gaining momentum during and in the aftermath of COVID, high-quality virtual tours are a crucial example of technology that offers an ideal vetting experience for prospective residents, no matter where they are. Realnyc is one such solution.
The leasing process needs its own set of solutions, too. TheGuarantors, for example, offers a security deposit replacement solution that both significantly reduces move-in costs for residents and allows landlords to offer this as a financial “amenity.” TheGuarantors also offers a lease guarantee policy that increases accessibility for qualified renters with nontraditional financial situations, while also protecting a landlord’s rental income against rent defaults, vacancies, lease breaks and other common risks.
A resident’s ability to make their rental home their own is an often overlooked amenity, even at luxury apartment buildings. Smart furniture company Ori provides modular suite configurations that can expand or contract based on the needs of residents. Smart concierge company TULU provides an in-building platform that gives tenants easy access to home basics and luxuries, such as e-bikes and even household appliances.
Additionally, BuildingLink is a valuable tool for streamlining package management, which can be a common pain point for the average New York City property. For example, the Willoughby in Downtown Brooklyn, which has 476 units, sees an influx of 6,000 to 7,000 packages every month.
There are many reasons every real estate owner/operator/landlord — particularly in a rental market such as New York City — hasn’t yet adopted these technologies. A key hurdle is a leadership cabinet unable, or unwilling, to change its ways. Therefore, it takes at least one knowledgeable advocate for technology at the executive level to manage these changes and implement new tools. Some real estate firms may also balk at the costs associated with tech integration. However, when compared to the price that renters are paying for a luxury living experience, or even the cost of high vacancies at a property, any upfront tech integration costs are well worth the investment.
The residential real estate industry will only continue to see more competition among forward-thinking landlords with amenitized, Class A properties. But the developers who embrace technology and view renters as the luxury consumers they are will continue to lead the pack.
Jarrod Whitaker is the senior vice president of residential operations at RXR.