The 2020 pandemic radically accelerated digital transformation across industries and, and in many ways, the digital experience has taken the place of physical interaction. This shift has given rise to new business strategies, particularly centralization. Real estate is no exception to this growing trend, especially in the multifamily sector. Let’s explore what centralization is, how it applies to real estate, how it’s beneficial, and the concrete steps real estate companies can take to benefit from this trend.
So What is Centralization Anyway?
Is centralization just the latest buzz word or the real deal? Broadly speaking, centralization refers to the concentration of data, decision-making & operations within a specific group or location. Think of it as the opposite of subsidiarity, which spreads data & decision making around so that things are handled at the lowest level of governance possible.
What is Centralized Property Management?
Centralized property management is the practice of operating several properties from a central or regional location, as opposed to having roles duplicated across each property. For example, a decentralized multifamily company could have an accountant, property manager, leasing agents & marketing professional at each apartment complex, while a centralized company would locate the staff in one office and take charge of multiple properties. Centralization has been around a long time, but the sudden boom in remote work caused companies to rethink how they’re structured, leading many to centralize.
Is Centralization Good or Bad?
Centralization has its advantages, most notably, efficiency and cost-cutting. Let’s look at a fictional ‘ABC Corp’ that owns 10 properties with twenty leasing agents (2 agents at each location). After deciding to centralize, ABC opened a regional call center to handle leasing for all 10 locations allowing them to reduce the staff from 20 agents to 12. ABC Corp now saves $400,000 on payroll alone, not counting the added savings from operating one medium sized office in lieu of 10 small ones. Moreover, ABC Corp’s new structure now allows for more streamlined decision-making & uniform operations under the direction of a clear chain of command where collaboration, monitoring, training and team building can all take place. This fosters a more focused vision, and more deliberate implementation of steps that work towards the vision. Centralizing allows for processes and increased oversight that yield more quality work.
Central decision-making could have blind spots, preventing smaller teams from reacting to their unique environments. Inadequate decision makers in a decentralized company would impact fewer people than in a centralized company, where their decisions impact everyone. A central leadership structure could also become bureaucratic, rife with red tape & toxic internal politics. All these disadvantages are downhill from poor leadership or poor structure, but this can be mitigated with proper planning. In conclusion, centralization is neither good nor bad in a vacuum; it’s all dependent on an organization’s size, complexity, culture, strategy, technology and what exactly they intend to achieve through restructuring. However, the potential for savings, efficiency & uniformity are always promising.
So Exactly What Does Centralization Look Like in Real Estate?
- Streamlined Workflows & Precise Recruiting
Decentralized property management often creates jack-of-all-trades roles at each property, requiring property managers to be accountants, customer service, marketing and other roles all at once. By centralizing these roles across properties into one regional office, businesses allow their on-site staff to focus on customer-facing functions, while qualified staff are hired for the more specialized roles. By giving team members specific roles and responsibilities, a business’ workflows are more efficient, and their staff perform tasks only in their specialization. This also gives staff better career progression path as they deepen their knowledge in their trade, leading to increased employee satisfaction & retention.
- Centralized Leasing
Leasing doesn’t have to be handled at each individual property; it can be done at a regional office or remotely for multiple properties. Moving this function away from properties: (1) allows companies to hire dedicated leasing teams with specializations in sales, CX, income/background-check verification & more (2) allows leasing agents to give potential tenants more options to pick from, increasing customer satisfaction & conversions (3) allows residents to get quicker service at the office instead of waiting behind 2 or 3 visitors looking for leasing information (4) facilitates self-guided tours, allowing potential tenants to view units on their own time, increasing satisfaction (5) standardizes the use of AI, automation & software in leasing across a portfolio.
- Better Data Mining:
Without centralization, onsite teams can only gather & analyze data from their own residents, missing broader trends and insights. A central property management team can interpret data from an entire portfolio, drawing richer insights on leasing interest, maintenance requests, rent payments & resident satisfaction. This big picture allows for more informed decision-making and better business development. This richer data can also help improve overall resident experience, & therefore retention.
- Consistent Marketing at Scale
Centralization isn’t just beneficial for operations; it also positively impacts the brand in many ways. In a decentralized portfolio, common questions may be answered differently at each property, creating inconsistent messaging for tenants & prospects. A central marketing team can hire true experts in the industry, standardize messaging across the portfolio, use rich centralized data to better tailor their communications, and more. This dedicated team will be better equipped than onsite staff to create a consistent brand image & customer experience, building trust with prospects & tenants.
Your Trusted Centralization Partner
We explored earlier how centralization fosters more pinpoint recruiting. When it comes to sourcing top talent, Relay Human Cloud has cracked the code. Relay is a staff-hosting company that connects local businesses to a global talent pool, while absorbing all the risk & hassles associated with offshore labor. Relay’s experienced property accountants, data analysts, leasing agents, assistant property managers, customer support, virtual assistants, legal assistants, marketing coordinators & more are the perfect formula for centralizing your operations. With the added benefits of operating in multiple time zones to get more done daily & paying a fraction of local labor costs, your business can get ahead of the competition. Relay Human Cloud has over 12 years of experience in global staffing, specializing in real estate and accounting. Relay is a proud to be the only staffing company in Yardi’s Independent Consultant Network, providing staff proficient on various Yardi platforms such as Rent Cafe, Voyager, & the ground-breaking Data Connect. To learn more about how Relay can streamline your real estate operations, schedule a call with us today!
