How to sustain your real estate business in 2022
The real estate market changes all the time, and you have to change with it. Michael Zaransky of MZ Capital Partners offers strategies to meet the challenges of tomorrow.
The first thing to understand about future-proofing a business is that it’s not just about reassessing when the timeline is about to change from year to year. Rather, it is an ongoing process, which never ends – or never should to finish.
As Managing Director of MZ Capital Partners, a Northbrook, IL-based private equity real estate firm specializing in multi-family properties, I am in constant contact with my team. We constantly discuss the evolution of our business and make decisions in real time. We are constantly recalibrating, constantly making mid-course corrections.
The times certainly demand it. When I started in the company in 1979, and even 20 years ago, things weren’t moving so fast, not evolving as much. You could do the same, and that would be OK. But things are changing so quickly now that you develop the feeling that not adapting is akin to failure, period.
This has been illustrated in countless ways, but as an example consider how marketing has evolved. It used to be that you took print ads in the newspapers that served the neighborhoods in which you were renting apartments. Potential tenants would respond to these advertisements, meet a rental agent on site, take a tour, and then make a decision based on what they saw and heard.
Almost overnight, it seems, prospects were able to research properties online, then visit 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 accelerated exponentially.
I don’t remember exactly when this happened, but the transition was not gradual. It was like someone had flipped on a switch, and all of a sudden it was like that.
As a result, we all had to be much lighter on our feet, much more willing to adapt. “Agility” has become a buzzword in real estate, like in every other industry, and the need for it has only increased during the pandemic.
And indeed, our firm has been nimble throughout this crisis, not to mention resilient. This is true of the entire sector, in fact. Multi-family occupancy rate in 2021 exceeded 97 percent, a record, and asking rents increased by almost 20%. This offset increases in building material prices, as well as the costs of delays due to supply chain issues for appliances, lumber, and more.
So above all else, that would be the take home lesson for a multi-family business – that the market is always changing and you have to change with it. This is not a task to be undertaken on January 1 (or thereabouts), but every day of every year.
Michael Mankins, Eric Garton and Dan Schwartz of global management consultancy Bain are listed several tips for the future in one piece for harvard business review, not the least of which was making sure your team has state-of-the-art tools and the expertise to use them to the fullest. As they say, “when people and technology work together, everyone benefits. »
Technology has become an important part of the multifamily landscape. Consider the aforementioned virtual tours. Consider online portals that allow tenants to pay rent or schedule service calls. Think smart devices like lights, thermostats, windows, blinds, etc.
The Bain trio expanded on this theme when they discussed other aspects of keeping a business ahead of the curve, including the importance of using data to make the best decisions possible.
Among their other recommendations for the future is developing an understanding of how jobs are changing and how the workforce itself is changing. For the first point, they write that the pandemic has forced every company to rethink the roles its staff should take on and how to assess each employee’s success.
And they write:
Fortunately, new tools and techniques that use people analytics and behavioral science can help companies define “what it looks like” in a particular role and identify employees who already have the necessary skills or who could develop them. with training. This allows companies to design talent development and recruitment strategies to meet their needs.
As for the workforce as a whole, they cite the United States Bureau of Labor Statistics noting that three out of four employees will be millennials by 2030 and that people of this age seek, among other things, flexible and supportive workplaces of the kind that have emerged during the pandemic. Digital natives, millennials will also accelerate the digital transformation of organizations even more than is already the case.
In short, the future is now, and it continues to come at us faster and faster. Therefore, it behooves businesses — whether in the multifamily sector or elsewhere — to dance as fast as they can.
Michael H. Zaransky is the founder and managing director of MZ Capital Partners in Northbrook, Illinois. Founded in 2005, the company deals with multi-family properties.