The first thing to understand about future-proofing a company is that it is not a matter of merely reassessing when the calendar is about to turn from one year to the next. Rather, it’s an ongoing process, one that never ends — or never should end.
As the managing principal of MZ Capital Partners, a Northbrook, Illinois-based private equity real estate firm specializing in multifamily properties, I am in constant touch with my team. We discuss our companywide evolution on an ongoing basis and make decisions in real time. We are forever recalibrating, forever making mid-course corrections.
The times certainly demand it. When I started in the business in 1979, and even 20 years ago, things didn’t move as quickly, didn’t evolve as much. You could do the same thing, and it would be OK. But things are changing so rapidly now that you develop the sense that failing to adapt is akin to failure, period.
That has been illustrated in countless ways, but as an example, consider the manner in which marketing has evolved. It used to be that you would take out print ads in the newspapers that served neighborhoods in which you were renting apartments. Prospective renters would respond to those ads, meet a leasing agent at the property, take a tour and then make a decision based on what they saw and heard.
Almost overnight, it seems, prospects were able to search for properties online, then tour them virtually, and make a decision instantly. Granted, most renters still want to see places in person just to assess the neighborhood and other factors. But the process has been accelerated exponentially.
I don’t remember exactly when that happened, but the transition wasn’t gradual. It was like someone turned on a light switch, and all of a sudden, that’s just the way it was.
As a result, we’ve all had to be much lighter on our feet, much more willing to adapt. “Agility” has become a buzzword in real estate, as in every other sector, and the need for it has only been accentuated during the pandemic.
And indeed, our firm has proven to be agile throughout this crisis, not to mention resilient. That’s true of the entire sector, in point of fact. Multifamily occupancy rates in 2021 exceeded 97 percent, a record, and asking rents were up nearly 20 percent. That has offset increases in the prices of building supplies, as well as the costs of delays due to supply chain issues on appliances, lumber, etc.
So above all, that would be the lesson for a multifamily firm to keep in mind — that the market is ever-changing, and you must change with it. That’s not a task to undertake on Jan. 1 (or thereabouts), but every day of every year.
Michael Mankins, Eric Garton, and Dan Schwartz of the global management consulting firm Bain listed several future-proofing tips in a piece for the Harvard Business Review, not the least of which was ensuring that your team is supplied with cutting-edge tools and the expertise to use them to maximum effect. As they put it, “when people and tech work together, everyone benefits.”
Technology has become a prominent part of the multifamily landscape. Consider the aforementioned virtual tours. Consider online portals that enable tenants to pay their rent or schedule service calls. Consider smart devices like lights, thermostats, windows, blinds, etc.
The Bain threesome expanded on that theme when they discussed other aspects of keeping a company ahead of the curve, notably the importance of using data to make the best possible decisions.
Among their other future-proofing recommendations are to develop an understanding of how jobs are changing and how the workforce itself is changing. To the former point, they write that the pandemic has forced every business to rethink the roles its workforce must take on and how to assess the success of each employee.
And, they write:
Fortunately, new tools and techniques that utilize people analytics and behavioral science can help companies define “what great looks like” in a particular role and identify employees who already have the needed skills or could develop them with training. This allows companies to devise talent development and recruiting strategies to help meet their needs.
As for the workforce as a whole, they quote the U.S. Bureau of Labor Statistics in noting that three of every four employees will be millennials by 2030 and that those in that age demographic are seeking, among other things, supportive, flexible workplaces of the type that have emerged during the pandemic. Digital natives as they are, millennials will also hasten organizations’ digital transformation to an even greater extent than is already the case.
In sum, the future is now, and it keeps coming at us ever more rapidly. As a result, it behooves companies — whether in the multifamily sector or elsewhere — to dance as fast as they can.
Michael H. Zaransky is the founder and managing principal of MZ Capital Partners in Northbrook, Illinois. Founded in 2005, the company deals in multifamily properties.