Know Your Comps to Navigate Any Type of Market
Going beyond Excel spreadsheets, property calls and macro-level data that offer limited visibility into competitors and performance.
By Stephen Ursery
Even before the coronavirus upended the apartment industry, operators were coming to the realization that they must rethink how they collect competitor data and to which specific comp metrics they should pay the most attention.
The pandemic has only accelerated the need to improve these business intelligence practices, said panelists in the APTvirtual session, “Pandemic Performance: Know Your Comps, Streamline Operations, Make Proactive Decisions.” The session presented a detailed examination of how operators can do just that and what the benefits are of doing so.
To start, an operator must ensure that the right properties are in their competitive set.
"Currently, comp sets are typically done in a very anachronistic way," said Blerim Zeqiri, Founder and CEO of Radix. "Operators tend to think that if a property is across the street or in the same zip code, then it must be a comp."
But this often isn't the case.
"You can't just include properties that are in your same zip code or within a two- or three-mile radius because some of those properties might be not be physically comparable with yours," said Jasmine Greene, Vice President at Maverick Residential, which recently merged with Roscoe Property Management.
"Maybe you have a really amazing gym or fitness center because that's the demographic that you're trying to target,” she said. “You don't want to compare yourself with a property that doesn't have that in their package because you're not going after the same resident or prospect. If your goal is young professionals, then you need to make sure you are competing with where the young professionals are living. It's about actually competing with the right properties and not just competing by default."
Zeqiri also argued that the traditional method of conducting comp surveys – having onsite associates call other properties and manually enter data into Excel spreadsheets – is far from ideal.
"It's riddled with inaccuracies and is very time-consuming," Zeqiri said. "It really puts the burden of data collection on the onsite teams, who certainly have a lot of other stuff that's going on."
Greene voiced similar sentiments. "When teams onsite are more focused on obtaining information versus reviewing information to have intelligent conversations and make strategic decisions, then you are opening up the room for error," she said. "I saw it all the time – I saw misspellings for renovations. I saw misspellings for amenities. I saw inaccurate data associated with other properties. That is huge when it comes to making those strategic decisions."
Maverick properties have replaced the traditional method with an automated system that collects data from competitive properties and removes that burden from associates.
The result is the properties are getting accurate, real-time, apples-to-apples data about their comps, Greene said. This is the kind of information that paves the way for the quick decision-making that allows operators to successfully navigate any type of market, even one that's going through a pandemic, the panelists said.
The automated process also allows associates to have truly productive phone conversations with leasing agents at competitive properties. "When they're having conversations with their comps, they can talk about the actual data and what's shaping the competitive landscape as opposed to having to spending that time gathering the data," Zeqiri said.
Green added: "You actually get more information because your comp knows, 'They're going to be giving me a call so we can talk about higher-level items,’ really creating that relationship within your submarket and your inner community, that helps all of us and gives us the ability to elevate ourselves."
The Right Data
Not only is it important that operators have a sound data-collection process, they also need to be paying attention to the right numbers when evaluating themselves and their comps, the panelists noted.
According to Zeqiri, closing following leading indicators like traffic and leases can help communities see where occupancy and rents are headed in the near future.
"We often talk about the accordion effect,” he said. “There are leading indicators such as traffic and leases – obviously traffic precedes leases. And then those lead to leased percentage and occupancy rates. Towards the tail end of the effect, we see concessions and net effective rent – all these things have a lag time."
Maverick pays particularly close attention to concessions, according to Greene.
"It's really important to understand if our comps are increasing their concessions or increasing their rents,” she said. “It's been amazing to see a reduction in concessions and an increase in rents, when that's the opposite of what I think people anticipated during this time. From a Maverick standpoint, from March to the end of August, our average rent growth was 7.89%, and that was across new leases and renewals, and it's because of this data. Concessions is a huge leading indicator for me and being able to see the trend is also invaluable for us to make choices strategically."
With real-time, accurate data in hand, Maverick has been able to get creative during the pandemic and avoid concessions, Greene said.
Instead, the company has served prospects and residents by offering security deposit alternatives. "I've been very impressed with the creative ideas that have come about from our team when we decided no more concessions because we want to be in the right position in the market," Greene said.
Stephen Ursery is a Content Manager for LinnellTaylor Marketing.