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As we approach the historically busy summer leasing season, multifamily operators and investors need to brace themselves for a season that is vastly different from anything we've seen before. Market conditions are signaling that a renewed focus on resident retention and customer service will be paramount this year due to lower occupancy rates and longer resident stays.
A combination of economic headwinds and shifting demographics have created a perfect storm impacting the rental housing market. As the markets cool down this summer, competition for residents will heat up. Properties that were previously hitting peaks of 97-98% occupancy may find themselves closer to 92-93% this leasing season.
In this environment of lower occupancies, the stakes for retaining residents have never been higher. With less prospect traffic coming through the doors, losing even one good resident is more impactful to the bottom line. Resident turnover is extremely costly when you factor in downtime for turning units, marketing costs for replacements, concessions, and more. Compounding the challenge is that residents are staying in rental housing longer than ever before. Our research shows the average length of resident stay has increased by over 25% in the last decade across the nation. Thus, losing a great long-term resident is an even bigger hit. Lasering in on resident events to show your current residents you care (pool party, anyone?) will help your community be ahead of the curve come the fall cool down.
One of the most important drivers of resident retention is customer satisfaction. Happy residents don't leave! And in today's digital age, customer satisfaction is essentially measured by online ratings and reputation. An exceptional online presence with 4-5 star reviews and an absence of 1-2 star reviews shows prospective residents that you provide a great living experience and existing residents feel valued.
Smart operators know that investment in customer service, responsiveness to resident needs, well-maintained amenities, and community programming pays huge dividends in terms of a positive online reputation. When the summer months heat up, it will be especially crucial to keep an eye on your maintenance service standards. Great customer service and, in turn, a stellar reputation, feed directly into your ability to retain high-quality residents cycle after cycle and current research shows seven out of ten residents are willing to spend more money for an apartment in a community that provides great customer service.
The 2024 summer leasing season may prove to be one of the most challenging in recent memory. Multifamily firms that double down on resident retention strategies by delivering best-in-class service and engagement will be best positioned to ride out any market storms. Don't let your hard-earned residents slip through your fingers this year - their renewals may be your most precious commodity.