No longer a mere speculation – the actual results of centralization

Estimated read time 5 min read

Centralization gained widespread attention, and there were many speculative theories about how it would play out in reality. Are entire jobs or tasks being centralized? Will the on-site team be reduced in size or will their role just be reimagined by the new management? We are now seeing more results first-hand as centralization moves from a concept to a reality in more companies! The OPTECH conference of NMHC revealed several stories that showed us the real implementation might not be as we expected.

Is Centralization Working as hoped?

Companies are first defining the functions that could be centralised. Suzanne Hopson identified three categories of functions on-site that could be centralized:

  • Marketers
  • Conversion (Sales)
  • Engagement (Including service team)

Many panelists who discussed their centralization stories agreed that administrative tasks, such as accounts receivable and payable, were the easiest to centralize. They used these tasks to start their centralization journey while assessing future opportunities.

As we shift from a “jack of all” approach to a more specialized one, we hear stories of increased efficiency among our team members. Kristy Simette Senior Vice President for Strategic Services, Camden Property Trust reported that she was able to reduce 170 assistant managers into 30 centrally-located team members.

We keep hearing about the consistency of work. As an example, when thinking about assistant manager, each APM is under a different property management, making it difficult to maintain consistency. A centralized team, on the other hand, all reports to the same manager. This means that everyone is getting the same training and guidance.

Efficiency with Non-Centralized Teams

Centralization can be achieved through the sales team, by implementing a flexible and floating leasing process or using virtual leasing strategies. Even before this could be implemented, the centralization of and other functions has a tangential impact on the sales process.

Although it is not always the case, sales “superstars” are often held back by administrative tasks. With our focus on “jack-of-all trades” leasing consultant job descriptions, they are often hindered with job tasks that don’t mesh well with core competency. We are hearing how leasing consultants who work in sales can focus more on their sales by centralizing administrative functions. They are more efficient in their sales process, and they have a greater sense of job satisfaction. Simonette also reported that their leasing consultants were given more freedom to lease other units in the “nest”, or region, rather than be limited by their inventory. It was also good news for top-performing salespeople, who were no longer constrained by the availability of their properties.

Remove Single Points Of Failure

A centralization approach can help mitigate risks with certain failure points. Losing a member of a small team is more painful. A single team member can represent up to 100% of the accounts receivable or 20% of the entire office staff. This creates a huge burden on the rest of the team and may even cause a mismatch of skills/training. By centralizing operations, the staffing changes will be taken care of by a larger centralized team, reducing the impact of turnover.

Change in Job Roles

The traditional multifamily ladder could be wiped out by centralization. The leasing consultant > assistant manager > property manger path is no longer the only way to progress in the industry. While some job roles may change or disappear, others are being created. Remote work is now a viable alternative for many on-site team roles. Josh Gambpp was asked about how to manage these changes without destroying morale. He explained that they told their team: “Stick With Us – Your Job is Getting Better.”

The net effect on staffing in Multifamily

It was evident that when centralization became a popular idea, there was some hesitation in considering that staffing levels could be reduced. Although certain functions might be centralized, operators seemed to believe that instead of reducing staffing levels, they would focus on improving the resident experience. Here we can see a divergence between the two sides of the centralization debate. Some operators are planning a shift to a more high-touch service experience for residents, while others are experiencing a decrease in staffing levels. One operator reported staff reductions of between 20 and 25 percent. These reductions did not result from layoffs but were rather the result of natural attrition in their properties. Operators were able avoid morale concerns because they didn’t have to layoff team members. Instead, they simply did not re-fill vacant positions.

The Next Step in Centralization

We continue to hear stories of centralization. This raises many questions about the evolution of our properties over time and their long-term implications. You can, for example:

  • Will centralization lead industry consolidation as certain categories may favor portfolios with a geographically dense distribution?
  • Will the collapse of traditional staffing lead to fundamentally different multifamily operations due to the breakdown in traditionally structured staffing?
  • Will there come a point when self-guided tours are so common that prospects will no longer want to take guided tours, except in very niche situations?
  • What other changes in process will centralization bring about?

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