AvalonBay Communities is best known as a luxury multifamily operator. At first look, their new development in Rockville, Maryland doesn’t appear very far from their norm. Its units are well fitted and professionally designed. The building itself is large, modern, and well-located near transit. But if you were to schedule a tour you would find a much different experience than in their other buildings. If you book a tour at this property in Rockville, you will be going it alone because it doesn’t have an on-site leasing agent.
This is part of a pilot program for Avalon Bay, but something they have thought a lot about. “We have an econometric group and data scientists on staff and they really have pinpointed that there is a growing demographic of young professionals that are not served by highly-amenitized Class A housing,” says Karen Hollinger, SVP of Strategic Initiatives at AvalonBay. “This isn’t just in Rockville, it is happening all over the country. This new group of renters is increasingly price-sensitive and, it turns out, are fine with a self-guided leasing experience.”
How they do it is relatively simple. You simply book an appointment online, submit an ID verification, and the system automatically provides a code to let yourself in. Currently, most large buildings have full-time leasing staff on-site to help coordinate tours and hopefully sign leases. According to Hollinger, “A rule of thumb is that you need one leasing associate and one maintenance person per 100 units. But for a typical building of 250 units, it would round out to three or four people in order to have office hours that would cover 6 days per week.”
Not only are younger renters ok with not meeting with a leasing agent, in many cases they prefer it. “Gen-Z and younger just want to move through the process quickly ,” said Georgianna Oliver, CEO and Founder of Tour24, a residential touring technology. It isn’t just the prospects who benefit. “We are able to collect a ton of data, even more than people are willing to tell a leasing agent sometimes, like what their price point is and what amenities they value the most,” Oliver said.
So, if self-guided tours become standard practice, will we start to see more buildings convert their leasing offices into rentable space? Beck Weathers, VP at Highmark Residential, doesn’t think so. He says that even more important than saving on labor costs is minimizing disruption to their residents. “We don’t look for a reduction in staff or even a reduction in hours,” he said. “We want to know if it makes jobs easier so our staff can be more focused on making the residents’ experience better.”
There are still certain parts of the leasing process that have yet to be fully automated so the thousands of leasing agents across the country can hold off before looking for a new job. “Self leasing is more than self touring,” says John Helm of RET Ventures. “It is a complicated process that requires a lot of different technologies to work together. Once you get that person identified you have to screen them. Then they need to have a tour scheduled. While they tour the properties you need to help them get to where they need to go. Then you have to actually be able to finalize a lease.”
Doing all of this requires integrations at a technical level that puts a lot in the hands of the vendors that service the process. But getting it right can completely change the way not only a building, but an entire real estate portfolio is managed. “Property companies are centralizing their entire back office,” says Timothy Fortner CEO at BetterNOI. “I would have never thought that would happen 5 years ago but since then the number of applications that are initiated from renters themselves has tripled.”
The tide certainly does seem to be turning when it comes to leasing offices. But rather than eliminating the need for leasing agents, it might instead transform their role. They might go from being the admin arm of the leasing office to the face of the building itself. Even AvalonBay’s Hollinger thinks that leasing offices will likely remain a modus operandi for most large buildings, “My gut says that most buildings will still have leasing agents. For most properties, these technologies will create an expansion of services, not a reduction.” After-hour touring is a great example of this. Most offices don’t tour a property at night but could, provided they have the right tools. Touring takes a lot of time and freeing leasing agents from the task can help them spend more time on the interpersonal part of the sales process.
Most buildings stand more to gain when it comes to increased leasing prices and decreased vacancy than reducing the labor costs of their leasing staff. But much of the growth in rental stock in the US will be in the affordable and workforce housing segment, not the luxury. These scaled-back communities like AvalonBay’s Rockville property might become much more common. Even if leasing offices don’t close, one thing is certain, leasing agents will have a lot less work on their hands when it comes to giving tours.
[SOURCE: PROPMODO – link]