Even though each community experiences its own unique seasonality, nearly all are afflicted in some form or another by the winter slowdown. Typically, the earliest indicator of when demand begins its decline is the start of the school year in the fall.
The few weeks leading up to the beginning of school is a make-or-break time for apartment communities. As the busy summer leasing draws to a close, the actions your community takes within this window can set the tone for how healthy your community's occupancy will be for the next several months.
In this blog, we'll go over how your community can prepare for the changes in demand brought on by the start of the school year.
Develop a Plan
How will your team react when a significant change in demand occurs? Depending upon your actions in the time leading up to the school season slowdown, your community may take two varying paths.
The first path is that you didn't make the necessary preparations, or were caught off-guard, by the change in demand. If you're falling a little short of your occupancy goal, your vacant units will be really hard to lease during the winter because a majority of seekers simply don't want to move in cold weather. In order to survive, you may be forced to throw more money into your marketing budget, or offer major concessions and rent specials that diminish your bottom line. Talk about placing unnecessary strain on your team that was completely avoidable.
Situations like these are why we developed a predictive occupancy metric called RentVision Occupancy (RVO), which gives you the ability to know your future vacancy weeks in advance.
The second path, of course, is that you were aware of the impending slowdown and had made the right actions to maintain a strong leasing velocity in spite of it. Leasing velocity is the rate of lease turnover, measured by the length of time a space sits vacant between leases. That's why it's important to have a plan before the slowdown, as you can prevent leasing issues that may take months to recover from.
A recommended course of action communities can adopt to help maintain a healthy leasing velocity involves these three steps:
1. Reduce turnover time.
2. Change lease length.
3. Adjust pricing options.
Executing these steps can't be done with some flashy marketing tactic. Instead, it takes a team-wide effort, involving everyone from management on down to your maintenance staff. In the next few sections, we'll go into more detail about how you could follow those three steps.
1. Reduce Turnover Time
In order to maintain your leasing velocity, the first area to address is your turnover process. The time it takes to completely turnover a unit and have it ready for either a tour or new tenant varies by each community. There are certain factors—total number of units, available maintenance staff—that affect the timing of this process.
That being said, to account for all of the last-minute move-ins and move-outs in the final weeks leading up to the start of the school year, reducing turnover time is something your team should prioritize. Apartment seekers are in a rush to find their new place, and many may want to be able to tour a unit, sign a lease, and move in a very short time span. It's incumbent on you to be able to have that unit ready for them.
A practice that takes into consideration your maintenance staff's time is ending leases on Sundays. If a lease expires on a Thursday or Friday, for example, it's likely that the unit will sit untouched until Monday, when your maintenance returns to work. Not being able to have that unit ready for a weekend viewing is a missed opportunity that looms large ahead of a slowdown in demand.
By having leases end on Sundays, you and your maintenance personnel can begin the turnover process first thing Monday morning. You can review each unit, develop a plan, and give your staff ample time to get their work done. As a bonus, since most of your vendors like your painters, plumbers, and carpet cleaners work Monday-Friday, they can begin their jobs literally the day after a unit becomes unoccupied. That alone cuts a few days out of your team's turnover rate.
You can also reduce turnover time by coordinating your maintenance crew and vendor schedules the moment a tenant submits his or her notice. By being proactive, you're avoiding future conflict. Everyone is on the same page, and ready to get the work started to get your units ready for the next resident.
2. Change Lease Length
If you don't know your community's seasonality, take the time to learn it. Seasonality is tied directly to the amount of traffic your website receives. An increase in visitors to your website indicates your community is in demand, therefore, you should also be experiencing more turnover, too. Check out our previous blog article about how you can discover your community's seasonality.
We've studied the seasonality for hundreds of communities across the United States. The typical date the school slowdown begins, especially for properties located in college or university towns, has been August 20th.
This graphic shows the seasonality of an apartment complex in our hometown of Lincoln, Nebraska,
which is home to the University of Nebraska-Lincoln and other small colleges.
Notice a significant drop in website traffic in late August-early September.
With that date in mind, you wouldn't want to have a bunch of leases end on, say, August 18th. That essentially eliminates any possibility of getting that recently vacated unit ready and leased in a timely manner.
One strategy your team could adopt is implementing 365-x lease terms. For example, if a new resident signs a lease on August 20th, have it end on August 15th. You can apply a buffer on most leases you sign in the time leading up to the start of the school year. This can give your team a little more wiggle room to be able to turnover a unit and lease it before demand slows.
3. Review Pricing Options
The best time to review your pricing is when you know there's going to be a significant change in demand.
In the final few weeks before school starts, decreasing your rental price may be the smart move. In doing so, you're accounting for the change in demand, and giving yourself a better chance at bringing your occupancy level close, or even above your target goal. This way, when things get slower in the winter, you're avoiding the panic and stress that comes with scrambling for new residents.
The cumulative effect of reducing your community's turnaround time, providing a buffer time in your lease terms, and lowering rent price ahead of a slowdown may allow you to actually increase your rate when occupancy is high.
You need to have a plan in place to maintain your community's leasing velocity when demand fluctuates. The few weeks leading up to the start of the school year, when demand historically slows down, is an especially critical time for apartment communities because the actions taken during this time can have lasting effects.
Reducing turnover time, changing lease terms, and reviewing pricing are a few recommended actions your team can make now in advance of the impending slowdown.