The demand for multifamily properties continues to be strong. According to the National Multifamily Housing Council, there was a swift resurgence in demand for apartments in 2021 — driving the highest year-over-year rent growth and lowest vacancy rates on record. Additionally, NMHC notes that these historically low vacancy rates (down to 7.3% in 2021) indicate continued pent-up demand for rental housing, and researchers estimate the industry will need to deliver approximately 266,000 new units annually to keep up.
Even with today’s difficult interest rate environment, these strong supply and demand fundamentals make 2023 an opportune year for multifamily development. Since one of the most important elements for the eventual sale of a new development is ensuring a quick and efficient lease-up process, the team at Fortress PropTech — multifamily industry veterans known for leading developments to profitable lease-ups — has compiled the following best practices for successful and efficient leasing.
Start Marketing Early
To ensure there is plenty of demand for your new development, it’s crucial to begin marketing as soon as possible to generate interest, improve search engine rankings, and secure early leads. Marketing options are plentiful and may include creating a property website, utilizing social media and working with local real estate agents to spread the word. Depending on the scale of the development, securing media coverage through a press release could also be a great way to generate interest and inquiries. Additionally, links to your site from well-respected publications featuring your press releases are great for Search Engine Optimization (SEO).
Research has shown that properties with a strong online presence tend to have higher occupancy rates. In fact, the National Apartment Association reports that approximately 84% of prospective renters begin their apartment hunt on a search engine like Google, with 70% landing on an Internet Listing Service (e.g. Apartments.com, Zillow, etc.). On average, NAA says apartment searchers use four Internet Listing Services while searching for their next apartment. This reliance on technology for apartment searches highlights the importance of establishing a strong presence online from the outset of a new development project.
In order to attract leads and fill units quickly, property managers of new developments should focus on advertising the features most attractive to potential residents. According to the 2022 NMHC/Grace Hill Renter Preferences Survey Report, renters are willing to pay a premium for certain amenities. Some of the most important amenities mentioned include:
- In-unit washer/dryer. The study indicates that 92% of renters are interested in this amenity, and that, on average, it generates a $54 monthly rent premium.
- Central air conditioning. A whopping 91% of residents expressed how important it is to have this amenity. In fact, they said they are willing to spend $54 a month on good A/C.
- Soundproof walls. Approximately 90% of residents expressed interest in this amenity, expressing their willingness to pay a premium of $46/month for it.
- High-speed internet access. Clearly an important amenity, 89% of residents in the survey wanted high-speed internet access and are willing to spend an extra $47 a month for it.
- Walk-in closet. A total of 88% of residents indicated this was an important amenity, and are willing to pay $43 more each month for units with a walk-in closet.
These amenities — in addition to clear and appealing descriptions of the location, price, size, and layout of the unit — are critical for attracting residents in the lease-up phase of any multifamily real estate development project. By incorporating this information into digital marketing early on, you’ll improve your chances of a rapid lease-up process.
Potential tenants have many existing apartments as alternatives, so it is often important to offer incentives to attract strong demand during the lease-up process. Things like free or reduced rent for the first few months or waived application fees, for example, can be the difference between leasing a unit and losing a qualified prospective tenant to the competition.
Apart from rent-related incentives, special offers like a gift card to ground-level retailers (for example, if the development is mixed-use and includes a grocery store), free parking for a number of months, or even an upgraded unit for the same price, can elevate new developments and make them stand out from competitors.
Make it Easy to Apply and Pay Rent
The application and payment process shouldn’t be convoluted or difficult. A 2021 study by Zillow Research indicates that 65% of renters would prefer to pay their rent online, and 45% of potential renters say that signing their lease online would also be ideal. Many landlords have adapted to meet renter demand for online lease signing and rent payment, but, as with many tech-related changes in the real estate industry, adoption tends to be gradual.
The study also shows that about 52% of renters currently report paying their rent online — up from 36% in 2018. The share of renters that sign a lease online has also trended upward, with 35% of today’s renters reporting that they signed leases online versus 21% in 2018. These are positive changes for residents and for the property management industry as a whole, but there is clearly room for improvement.
The good news for property managers navigating a lease-up is that a digital-first strategy will help set you apart from the competition. In addition to being loved by tenants, signing documents and paying rent online is more secure and convenient for property management teams — ensuring better tracking and more reliable payments by leveraging things like auto-pay.
By adopting robust technology solutions prior to marketing a new development — including online application tools and payment portals — managers have the ability to streamline each process and provide a convenient and enjoyable experience for tenants.
Help Foster a Sense of Community
As with incentives, potential renters are considering more than just the financial component when apartment hunting. For example, by building a sense of community, you create your own powerful marketing tool — especially for new multifamily developments. Simple activities like hosting events and creating appealing common areas can foster a greater sense of community. Managers can help facilitate this too by ensuring the community-friendly atmosphere is properly conveyed and promoted to renters through marketing materials.
To leverage increased adoption of digital experiences in the lease-up process, managers should also consider property management platforms that include resident mobile apps and community engagement tools. Through the resident forums available in these apps, residents can chat about events in the apartment community, as well as in the broader neighborhood. Additionally, these forums can often provide answers to frequently asked questions about the community, which will save your team time and potentially provide additional content for future marketing initiatives.
Offer Flexible Lease Terms
Renters want options, but the multifamily real estate industry often doesn’t offer the level of flexibility desired. According to a national CPI Housing Survey by the National Bureau of Labor Statistics, from January 2022 to June 2022 59.6% of leases were for 12 months, while 40.4% of leases were month-to-month or some other length.
However, according to a national study by ResidentRated — a renter satisfaction survey program — the average length-of-stay for a U.S. renter in a multifamily building is 27.5 months. This is a likely indicator that the majority of the market struggles with the decision to renew their lease or move out at the end of year two.
To improve lease-up velocity and retention while appealing to a wider pool of prospective tenants, managers should consider offering flexible lease terms beyond the typical lease term — such as those short-term or month-to-month options. This is especially true as a report by NMHC and NAA on U.S. Apartment Demand Through 2035 finds that renters are an increasingly diverse group in terms of age, race, and family and household size metrics.
A diverse population requires diverse offerings. To meet the varied needs of renters, multifamily developers — and the managers they work with — should consider offering leasing options that could work for and appeal to anyone — essentially expanding the pool of potential applicants.
Follow Up With Your Leads Promptly
Don’t let your leads fall to the wayside. To help convert leads into residents, make it a priority to follow up in a timely manner. Sending emails or making phone calls is an easy way to remind prospective tenants of your development benefits and availability of units.
Another powerful way to interact with leads is to provide a chat window — monitored by a real person — on the property website. There are a wide variety of products to assist with providing automated responses to frequently asked questions, but it is advantageous to have a sales team member ready to jump into chats and guide potential residents to the information they need. After putting so much effort into marketing, it is essential to have the team and processes in place to effectively convert your leads into paying residents.
Leasing up a new multifamily development requires a combination of marketing efforts, creative tactics, flexibility, and committed follow-up to attract and retain tenants. By following these best practices, you can increase the chances of a successful leasing process and ensure that your development is fully occupied.
Fortress Property Management Software was built by veteran property managers to deliver a remarkably easy to use interface, real-time insights and best-in-class customer support. Learn more about Fortress from the articles below:
- Fortress: Built by Property Managers, for Property Managers
- How Property Managers Save an Hour or More Each Day With Fortress
- How Can Fortress Help Manage Your Affordable Housing Units?
- Why Did Walker & Dunlop Invest in Fortress?
Or schedule a demo with our team below and see Fortress in action: