April 22 2024

Learn best practices, understand and avoid the roadblocks, and how to get started on your own centralization journey

The Forum kicked off with a panel featuring executives with more centralization experience than any other panel in the history of multifamily. While we are prone to hyperbole, it’s not hyperbolic to say that the women of multifamily — Kristy Simonette, SVP Strategic Services + CIO of Camden Property Trust; Jessica Anderson, SVP, Operations of Essex Property Trust; Jamie Gorski, Chief Experience Officer of Windsor Communities; Christine Williams, VP Operations + Admin of QuadReal Residential — were trailblazers of the new operating model and influential in pushing it to become the standard operating model for multifamily. 

At Funnel, we’ve long said that centralization is for everyone: REITS, mid-market operators, third-party managers, and large owner-managed portfolios. Despite the universal benefits of centralization, no two operators choose to move to the new operating model in precisely the same way. Keep reading to learn from four industry leaders on their centralization journey. 

Work re-imagined

In February 2021, facing a shortage with 88 open operations positions, the emphasis on self-service became paramount for Kristy Simonette, SVP of Strategic Services + CIO of Camden Property Trust. Camden is an industry-leading REIT, with a focus on innovation and technology-forward approaches. They’re headquartered in Houston Texas, with ~60,000 units. As a part of their centralization journey they layered a renter-centric CRM and AI solution on top of their long-standing contact center allowing them to give their customers the optionality on how they wanted to be serviced, and supported their teams. Before doing so they never had a CRM. They called their centralization initiative “Work Reimagined.”

Funnel data shows that 63% of Camden’s tours are booked by the virtual leasing agent AI solution. “That means that, even with those 88 open positions the action in the business was still occurring behind the scenes,” says Simonette. Their Virtual Agent AI solution also took care of 4,492 tasks at one time. “I could never staff for that. I could never staff on site plus my contact center. I mean, you just can’t do it. So you have so much business coming at you and you just have no way to handle the follow-ups that are sitting out there,” says Simonette. “My mantra was if we can automate it, we will automate it.”

In the new operating model, the ability to automate the mundane and handoff tasks between different teams at various points of the renter journey is huge. 

The restructuring, under the Work Reimagine initiative, opened up new specialized career paths for team members and recognized the need to let team members play to their strengths instead of forcing them through the status quo career journey. Camden chose to “nest” in homage to their hummingbird logo, or group one to three communities together geographically. Other teams they created or downsized: 

  • Created 40 district manager roles that have a portfolio of 10-12 communities. 
  • Started a new position of multi-site managers, or sales manager roles that gave people the ability to manage multiple sites and leasing staff across multiple sites. 
  • Spun up a 35-person shared services team that handles the move-ins, move-outs, financial account statements, renewals and all the transactional-related pieces. 
  • Added 15 operations analysts who were more similar to budget financial managers who were a higher level. 
  • Eliminated 170 assistant manager positions (through natural attrition, promoting team members into newly created roles, and not filling the 88 open roles previously mentioned). 

This restructuring involved reducing the number of leasing consultants, but compensating them better. They uncapped commissions and offered new career tracks some of which included remote work opportunities. They provided their team members with rewarding, meaningful career paths, and the results followed. Camden closed their leasing offices on Sundays without a drop in performance, paid their leasing team members on average $50% more after centralizing, and saved $4-5 million annually. 

It wasn’t all roses, they also had roadblocks. Their customer sentiment is measured on a 100-point scale. Historically, they’ve hovered around 90, at one point in this journey it dipped to 83. They stayed the course, and in 4 months the customer sentiment score rebounded. 

“You’re gonna have missteps and you’re gonna have people that you put in positions that are so wrong for that position,” says Simonette. “You just have to be flexible and be ready to pivot and make quick decisions and change.”

Disrupt or be disrupted

Jessica Anderson SVP, of Operations Essex Property Trust, shared that part of their motivation to move to the new operating model was to ensure long-term viability of the business. Essex is a 61,997-unit REIT primarily focused in west-coast markets, they’re #13 on the NMHC owner-operator list for 2024. 

These numbers are impressive. However when you think about how many multifamily REITs there used to be in the ’90s and how few there are today (and even fewer with the AIR communities acquisition recently), Essex saw centralization and operating efficiency as key to future-proofing their business against external factors like inflation and stagnant rent growth. 

“How do you generate value when really nothing else is going in your favor?” says Anderson. “Ultimately overhauling our operating model was the way to go and technology really supercharges it.”

Essex started their centralization journey with a contact center, and then moved on to standardizing and optimizing their application process with a centralized application team. According to Funnel data, Essex is 15% faster than the broader funnel portfolio at going from the start of an application to countersign. However, when you take out the renter’s side of that metric, and only how fast Essex’s agents and their centralized team are at approving renters, we found that their efforts around strategic staffing paid off. Essex is 39% faster at going from application submission to application decision than the broader Funnel portfolio at this step of the process. 

They’re able to achieve these above-and-beyond results because they have a specialized regional sales team, so that’s all they do. Their team essentially is faster because we put a huge emphasis on standardization and streamlining as much as possible, cleaning up our legacy procedures. The importance of standardization in centralization efforts cannot be overstated, as it not only enhances efficiency but also ensures consistency across operations. 

A key part of the centralization journey is how you present this idea to your teams. Essex ultimately took a very transparent approach. They piloted the operating model at a few communities, built a multi-year road map, and then shared with the organization broadly. They shared the what, the why, and included teams in the discussion along the way. 

Centralization saved the company millions of dollars, and in turn Essex was able to take better care of their people, with an average pay increase of roughly 10%-15% for administrative teams. 

One of the surprises on their centralization journey is that it hasn’t always gone smoothly, their customer sentiment scores dipped below three at one point, and Essex took the leap of faith to double down on centralization to drive the efficiency and customer service that they knew it could. Today, their sentiment scores are above four.

Shared vision and open communication allowed QuadReal to move quickly

In 2021, Christine Williams, VP Operations + Admin of QuadReal Residential, looked at their previous CRM provider and realized that they had a backlog of 10,000 open tasks. Their goal was to get back to customers within 24 hours and the data showed that teams weren’t able to do that. For background, QuadReal has 39 communities across three provinces, two of which are rent-controlled, totaling over 10,000 units they’re owner operator, and backed by a pension fund. Their goal is to provide best-in-class service and homes.

QuadReal realized that their CRM provider wasn’t giving them the flexibility to successfully centralize. So they piloted three CRMs, and selected Funnel’s CRM and AI solutions. QuadReal is one of the fastest moves to the new operating model that the Funnel team has ever worked with. Communication and trust were critical components of QuadReal’s centralization strategy. By involving teams in the decision-making process and reassuring them that centralization was not a threat to their jobs but rather an opportunity to focus on preferred tasks, QuadReal fostered buy-in from their staff. 

Prior to centralizing its leasing and operations functions, Quadreal had already centralized: 

  • accounts payable
  • revenue administration
  • renewals

Any of those annual administrative tasks were done in the head office. Teams trusted that their jobs were secure because they’d already seen the success of centralization with other functions at QuadReal. 

QuadReal’s approach to determining which tasks stayed on-site and which were centralized evolved continuously based on the needs of each community. Initially, centralized teams handled tasks from prospecting to tour booking, allowing on-site teams to focus on personalized interactions with prospects. However, as feedback from on-site teams indicated a desire for more involvement, QuadReal adjusted their approach to find a balance that worked for each community.

Because of these iterations and shared trust QuadReal has seen phenomenal results: 

  • 33% increase in tour-to-lease conversion
  • Sped up the lead to lease process from 26 days to 7, a 73% improvement. 
  • 35% Increase in leases with a 15% decrease in leads. 

The new operating model increases performance even in a market that has low unit turnover, high occupancy, and staffing stability like the Canadian markets. 

It’s a risk not to change

There is often a misconception that centralization and providing an excellent renter or customer experience can’t go hand in hand. Windsor/GID is renowned in the industry for providing excellent customer experiences, and they think that both are possible. They’re the 17th largest NMHC owner operator with 55,454 units headquartered in Atlanta, Georgia. Jamie Gorski, Chief Experience Officer of Windsor Communities shared about their centralization initiative called “Windsor 2025.” 

The challenge facing Windsor/GID revolves around the headwinds facing all of the multifamily industry: increasing Net Operating Income (NOI) amid lower rent growth, staffing instability, and rising costs. To address this they adopted a new business model centered on centralization, paired with regionalized leasing and maintenance. They felt by investing in our people, processes, and technologies, our associates, customers, and investors would thrive. 

Navigating the transition involved creating a vision for Windsor 2025, emphasizing the mantra of “Bigger Better Jobs” to communicate the benefits to our workforce. Strategic operations and change management played pivotal roles in ensuring a smooth transition, resulting in sustained customer satisfaction and organizational success.

When considering the risk of changing almost every aspect of your operations versus doing nothing Windsor saw the benefits of the change. “I would say that if anything, it’s the risk is: not doing anything and waiting any longer,” says Gorski. 

As a part of their centralization journey The Windsor team has stood up 

  • Centralized support services, and created a sales enterprise
  • One of their new positions in the sales track is the Regional Leasing Coordinator (RLC). RLCs focus solely on sales – they work remotely and no longer have on-site responsibilities.  Windsor has already seen a reduction of open tasks, higher conversation to appointments, and better absorption thanks to the impact of this position. 

Their customer experience also benefited, Windsor remained number one in customer satisfaction by Kingsley.

Additionally, their teams are happier too. After taking one of the first steps in their centralization journey (rolling out the Funnel CRM portfolio-wide) the Windsor team found that: 

  • 71% associates felt little to no pain with the implementation of Funnel.
  • 84% reported that addressing all their daily actions in the queue is a faster, more efficient process in Funnel CRM.
  • 82% of associates reported that they found Funnel easier to navigate in comparison to the previous CRM.

A win for the bottom line, teams, and the renters. 

For believers in a better operating model 

In conclusion, our journey towards centralization and technological integration reflects a proactive response to industry challenges. By embracing change and investing in our people, processes, and technology, we’ve positioned ourselves for continued growth and success in an evolving market landscape.