The apartment industry, like many industries, resists change for many reasons. Multifamily is an expensive industry to be a part of. From the cost of building a community to maintaining it—it's high in cost and risk from the start. Since it's high in risk, ownership and consumers are cautious. It's expensive to operate a property and it's expensive to rent an apartment. So, when you have cautious owners and consumers, the result is a stagnant industry.
There are benefits and disadvantages to resisting change. The company who maintains its current ways won’t be a guinea pig who suffers when a new marketing experiment or business strategy fails.
But a company that refuses to evolve also runs the risk of missing out by failing to recognize growth opportunities. They will likely be overtaken by competitors who begin using new technology sooner and gain a major competitive advantage over late adopters.
Technology is Leading the Way
Every business transaction has two parties—producer and consumer. If one changes dramatically enough, the other must respond. Since renters shop for apartments online, more specifically, search engines, apartment communities must respond by providing an online user-friendlyexperience.
How do we know this?
We looked at the data.
The number of rental housing units in every city in the US is public record. We looked up the number for many major American cities--Atlanta, Dallas, Milwaukee, Phoenix, Tampa. We pulled data for 54 major American cities with a combined 14 million rental units. We reasoned that half of those units will turn every year and then compared that number of vacant units to the number of apartment searches on Google. What we found is that virtually every major American city has more apartment searches on Google every month than it does likely vacant units.
In some cases, there are far more Google searches than there are vacant units. For example, Seattle is facing major housing shortage right now and in the Seattle metro, there are 5.08 searches for every expected vacant rental unit. Likewise, we see 3.01 searches for every expected vacant unit in Pittsburgh, which is going through a bit of a revival right now and is growing rapidly.
Apartment hunters have completely transitioned to online shopping. Building your online presences is now an essential component of your apartment marketing strategy.
Are you using new technology or holding to pre-digital methods in a digital world?
One objection to what we have said so far is that the data simply shows that people search for apartments on Google; it does not show that they have abandoned listing services. Indeed, if listing services perform well on search engines (which they often do), then there is still good reason to work with listing services.
There are two important factors to keep in mind.
First, digital information is fundamentally different than printed information because digital information is basically limitless. 25 years ago newspaper ads and print guides were the only way to learn about apartments in your area. Today, that is no longer true. We now have local business listings on Google, online reviews, community websites, and anything else that a search engine like Google is able to find when a person searches for an apartment community, which could include newspaper stories, public records, etc.
Second, before people get to the ILS, they start on Google. And after 20 years of gathering data on users, Google is increasingly building their own directores rather than directing people to external directories. For example, search for “restaurants in (your city).”
Why does Google do this? Because it is better for them as a business to produce the directory on their own than it is to link to an external directory. If they build their own directory, that’s another valuable product they offer users. They can sell ads inside the directory and continue collecting data on users utilizing said directory. So while Google hasn’t expanded its business directory into every industry, the incentives strongly lean towards doing that eventually.
Where does that leave ILS’s? Even today they are not as valuable as they once were because people can continue their online search and find further information even after they exhaust the data on an ILS. But, more importantly, ILS’s have an enormous vulnerability in that they are only valuable for as long as Google ranks them well in organic search and allows them to be the primary online directory for apartment communities. Once Google branches out into that direction for themselves, the ILS’s will be far less valuable.
What this means is that an apartment community with a true digital-first philosophy will not be able to simply sign a few long-term deals with ILS’s and be up to speed. The demands are greater. But, then so are the opportunities.
A True Digitally Native Multifamily Industry
So far we have covered that almost every apartment search in American cities begins online. This means that having an online presence is not really an option for apartment communities, but a necessity. However, “having an online presence,” does not mean, “be on the major internet listing services,” because those listing services are not helping you build your personal online presence. So what does it mean to have an online presence as an apartment community?
Let’s start by focusing less on the specifics and instead focus on how you can best serve your prospective residents. We live in a day where shoppers expect shopping to be easy. Most products can be purchased with a single click on Amazon, TV shows and movies can be downloaded and watched at any time, and any piece of information you can imagine is readily accessible on your phone. Apartment shopping should be easy too.. Renters should be able to confidently lease an apartment without ever stepping foot onsite. The key question is, how can you build an online presence that makes apartment shopping as easy as shopping on Amazon?
There are two primary things you need in order to accomplish this goal. First, you need a community website that performs well for users—meaning it is fast, mobile-friendly, and easy-to-use. Your website should also include basic product information, which includes rental rates, square footage, bed and bath count, amenities, pet policy, and so on. If it’s a question your prospective residents often ask, then, the answer should be on your website. Second, you need floorplan-specific video and photo content that allows people to see their future apartment. If you can provide both of these things, then you are ready to give prospective residents the easiest possible apartment shopping experience.
Building a successful apartment community where vacancy is under control and revenue is healthy requires hard work, but it also requires creativity. Sticking to the comfortable, familiar methods won’t work anymore. Information is infinite and keeping a prospect’s attention is difficult. We need to rethink the entire strategy of marketing, leasing, and managing apartments. In a digital world, we must incorporate technology into our marketing strategy. There is a challenge in attempting a task like this, but there are also many rewards to be had for those who understand how marketing works today and build a platform that aligns with the expectations of prospective residents.