A New Era of Operational Excellence for Multifamily - by Marc Hershberg
The multifamily industry grew massively over the last decade–total transaction volumes were up 250% from 2012 to 2018, the biggest year on record. For many individual property types, 2020 or 2021 were their best years yet.
Even when faced with multiple headwinds in 2022–ongoing supply chain disruptions, rising inflation, and interest rate hikes–the overall resiliency of CRE was on display. Now, however, we are faced with more economic uncertainty than we’ve experienced in the last 15+/- years and those adverse external headwinds can create ripples for multifamily investors and owners.
In other words, the multifamily sector is entering into an era of operational excellence when faced with the most amount of “wild card variable expenses” since the last recession. In today’s case, there are genuine concerns as it relates to the banking sector’s turmoil and volatility, property insurance costs rising, job & wage deceleration, taxes & payroll, etc—all of which can erode margins, if not effectively managed. Employing creative and innovative solutions during this period to control expenses while increasing resident retention and increased leasing traffic is critical to keeping operating margins in the black.