As with many other businesses, the fall is a time to look forward in the multifamily real estate sector — to set budgets for the year ahead, plan and project. And though this asset class has remained remarkably resilient during the pandemic, the primary lesson learned over the past 18 months regarding marketing is a simple one: Be flexible.
Be ready to pivot your plan at a moment’s notice because you never know what might lie ahead. Here are a few things to consider when creating your 2022 marketing budget.
Take a look at the state of the market
At MZ Capital Partners, the Northbrook, Illinois-based private equity real estate firm I founded (and I serve as managing principal), we have set our marketing budget at pre-pandemic levels, understanding that demand remains high. And despite everything, renewal rates and rents are still robust, and there is a shortage of new properties.
And it’s expected to remain between 5.25-5.75 percent through the end of the year. Moreover, nationally 95.6 percent of rents had been paid as of June 2021, which is comparable to the rates in June 2019 (96.0) and June 2020 (95.9).
Vacancy rates were no doubt impacted by the nationwide eviction moratorium that began in September 2020. Steve Theobald, vice president of the Maryland-based real estate finance firm Walker & Dunlop, wrote in August 2021 that there is some expectation that a resurgence in the number of available jobs will offset the end of the moratorium or a halt in subsidies available to those adversely affected by the outbreak.
So we remain hopeful that some of the high demand will remain and renewals will continue to be at stronger levels, the result being that many of those marketing dollars will be saved over the course of the next year.
But again, it pays to be vigilant — to understand that current market conditions won’t last forever and that alterations to your marketing strategy will undoubtedly be necessary at some point.
Lean hard on tech
The multifamily sector was ahead of the technological curve, having embraced innovation as part of its marketing strategy well before such advances were made necessary by the pandemic.
Chief among them was the use of virtual tours — something 2 in every 3 renters preferred, according to a 2020 poll from LCP360 — on owners’ websites, as well as in emails to prospects and in social media posts.
And indeed, the National Multifamily Housing Council concluded that 14 percent of prospects would be comfortable renting an apartment without setting foot in it first, a number that seems sure to rise in the years ahead as virtual tours become increasingly sophisticated. One expected tweak is a rise in virtual reality, which is projected to be a $209 billion business by 2022.
Of course, some old-school marketing approaches still have their place. A 2019 Zillow study noted that 71 percent of prospects expect to hear back from property managers within 24 hours of inquiring about it, but only 51 percent actually do.
I would argue that 24 hours is way too long in the current environment. And a post on the website Wepromote.com suggested that increased use of gadgetry — especially that which involves artificial intelligence and machine learning — would free up team members from repetitive tasks and enable them to respond to such inquiries in a timely fashion.
Use the intel you have
Although marketing has changed dramatically in the 40-plus years I have been in the business, I would submit that it has become easier than in years past because of some of the analytics and the software we use to follow up leads.
The metric to which we pay the closest attention is the source of quality leads — of leads that end up being converted into applications for leases, rather than just inquiries.
The point is that the guesswork has been removed from marketing. The numbers are the numbers. They are instantly available and infinitely valuable. They allow us to hone in on which internet advertising providers bring us the most qualified leads.
This is particularly valuable because it can differ by region, and we do, in fact, hold properties in different parts of the country. So we can drill down and find out how to get the most bang for our buck in any region.
Going forward, we’re seeing growth in urban markets. In contrast, suburban markets — markets that were boosted by the trend toward remote work earlier in the pandemic — have remained strong while growing. That would indicate, as mentioned earlier, that there would not be any great need to devote more capital to marketing at present.
At the same time, it’s best to keep in mind that change can come at a moment’s notice and that it is crucial to be adaptable. If we have learned nothing else from this public-health crisis, we have certainly learned that.
Michael H. Zaransky is the founder and managing principal of MZ Capital Partners. Founded in 2005, MZ Capital Partners, based in Northbrook, Ill., deals in multifamily properties.