What does the future hold for multifamily? Will rent growth exceed budget expectations or not? What’s going to be the path of inflation and interest rates? Will demand rise or fall? So many questions still remain. But there is one thing most people feel certain about: There is much uncertainty!
While the uncertainty in multifamily can be frustrating, this is not a time to hang tight to the status quo, simply hoping for the best while bracing for the worst. Instead, it’s an opportunity to make strategic, operational shifts to buffer your business from possible market changes and economic downturns.
In this blog, we’ll examine the uncertainty surrounding rent growth facing multifamily property owners and operators and offer some ideas for avoiding the pitfalls.
Rent Growth in Multifamily
In 2023, multifamily property management operators were grappling with significant uncertainty regarding rent growth. A survey by ResMan highlighted that 80% of operators lack confidence in meeting their budgeted rent growth goals of at least 3%.
This pervasive doubt continues to be fueled by various factors, including economic volatility and increasing operational challenges related to employee hiring and retention.
Unfortunately, that lack of confidence echoes across the industry. And while rent growth had positive movement in October 2023, according to Zillow, several factors suggest rent growth is moderating as some interesting trends emerge.
Michael H. Zaransky, Founder and Managing Principal of MZ Capital Partners, writing for Forbes.com, notes some exciting areas of growth:
- Southern suburban markets continue to grow.
- The single-family rental market is gaining momentum.
- Renters will demand more from their living spaces.
Increasing NOI Amid Rent Growth Uncertainty
As the multifamily industry faces these uncertainties, savvy owners and operators have turned to innovative solutions to add value for residents while generating additional net operating income (NOI).
Better Utilize Space:
One key challenge multifamily operators face is efficiently utilizing space. Traditional package management methods often consume valuable space that could otherwise be used for more productive purposes.
Fetch’s offsite package management solution offers a strategic alternative: relocating package storage offsite to free up underutilized areas within properties. With no onsite space required, that’s a WIN!
This newly available space can be transformed into revenue-generating amenities, such as co-working spaces, podcast rooms, pet grooming service spaces, or event rooms, thereby enhancing the overall property value.
However, the financial benefits of Fetch’s solution extend beyond just repurposing space.
Maximize Employee Performance, Elevate Experience:
As the ResMan survey shows, staffing challenges and the possibility of a recession remain key concerns. By alleviating the burden of package management, property staff can focus more on core operational tasks and resident services, improving overall efficiency.
In today’s challenging labor market, this streamlined approach reduces labor costs associated with package handling and minimizes the risk of misplaced or delayed deliveries, leading to higher resident satisfaction and retention rates. These savings contribute to more stable and predictable revenue streams in an industry where every dollar counts.
Moreover, Fetch’s system enhances the resident experience, a critical factor in maintaining a competitive advantage in the multifamily market. With the increasing trend of online shopping, residents expect seamless and secure package deliveries.
Fetch ensures that packages are delivered directly to residents’ doors, eliminating the need for them to retrieve items from a central location. This convenience not only boosts resident satisfaction but also serves as a unique selling point for prospective tenants, thereby supporting occupancy rates and rent growth.
Fetch Provides a Solution to Rent Growth Uncertainty
While the multifamily industry faces substantial challenges and uncertainty regarding rent growth, innovative solutions like Fetch’s offsite package management provide multifamily property owners and operators with a viable path to unlocking hidden profits and enhancing property value.
By repurposing underutilized space and improving operational efficiency, multifamily operators can more effectively navigate the current economic landscape. Embracing such solutions will be crucial for staying competitive and achieving financial stability in these unpredictable times.
