I was recently discussing property management, operations, and technology with a senior asset manager, who made a comment that stuck in my mind: "Great regionals can overcome an average operating platform, but a great operating platform can't overcome average regionals."
The comment struck a chord with me because I have spent a lot of time with regionals this year, and it has given me a greater appreciation of how different the world can look through their eyes. Their perspective can highlight opportunities that may fly under senior management's radar.
Why the regional's view is different
The regional manager's view can contrast with the C-suite perspective on property operations. Regionals tend to combine a unique familiarity with their communities and with the specific locations in which they operate. It's a set of insights that can be extremely useful, not least in understanding technology adoption.
Recently I have written articles discussing the disconnect between technology vendors and operators. One piece talked about how paying too much attention to what drives engagement, particularly digital engagement, can distract us from developing the kinds of insights that persuade potential users to adopt new technology. A second article referenced research from Forrester, which highlighted how poorly companies tend to understand the value their customers find in their solutions.
These gaps affect not only those selling technology, but also how we think more broadly about technology. It can lead us to follow industry-wide narratives that often miss the mark on what's happening in the great variety of operations that make up our industry.
This gap in understanding is well worth filling, and you can do so by talking to regionals, as I have learned over the last few months. The two examples below, based on client projects, illustrate the point.
Payments: the Classic "10% Problem"
Payments, particularly the replacement of paper-based payments with digital alternatives, have been a priority for operators for years. But the difference between "mostly" and 100% paperless is one of those "10% problems" that falls short of being a C-suite priority.
Yet talking to regionals can lead you to understand how significant that 10% is. Regionals have a handle on the number of money orders and checks that their teams still have to scan and the amount of work that entails. They understand the frequency of errors and the shocking number of steps site teams still take to process rent, even in cases where most payments are electronic.
Regionals also tend to be acutely aware of the customer experience opportunity that the 10% represents, both in terms of security and general inconvenience. They understand the variety of contexts in which residents make payments and what constitutes a good way to support this crucial function. These valuable insights are distilled in a new white paper published on this site a few weeks ago.
Connected Communities: Changing Decisions
As I noted in this year's 20 for 20, decisions relating to PropTech are taking place more locally than other more familiar technology decision types. For example, the decision to roll out a smart home package in a multifamily community is quite different from the highly centralized decision to roll out, for instance, a CRM.
Installing smart technology means adding specific components (locks, thermostats, etc.) to a physical property. The context (vintage, demographics, etc.) of each community determines whether or not the implementation is feasible. Add to the scope managed internet service—an increasingly important component of the smart community—we must also consider the expiration of existing internet contracts, which are also specific to individual properties.
For these and other reasons, implementation decisions are made on a case-by-case basis: rather than as part of a large-scale rollout. In the future, the majority of smart tech decisions will be part of the business-planning process for that individual property. For most communities in the multifamily industry, that planning process is a conversation between institutional ownership and those in charge of running the planning process. That's typically regional management rather than the corporate leadership audience upon whom most tech companies focus their sales and marketing efforts.
With this change, regionals have greater influence on decisions to acquire some types of technology and are directly responsible for planning how to implement them.
It changes the nature of the conversation about technology adoption, as I recently discovered while researching a brand-new guide to smart community planning. Regionals must represent a business plan to ownership. That plan is increasingly likely to include new PropTech, so the benefits must be clear enough to be compelling to financial stakeholders and achievable by the regional and property team who are ultimately responsible for delivering them.
Beware of REIT Bias
I've become aware this year of a growing bias in the way that people think about technology — I think of it as "REIT bias." Public REITs own their infrastructure and have the resources to make global decisions about the entire portfolio. They also tend to be early adopters of new technology, and the experiences that they share in public can color the industry's view on technology adoption.
Yet, as discussed in 20 for 20, most companies do not have the same opportunities or latitude to make decisions that REITs do. Major technological trends like centralization and deployment of smart technologies are good examples: adoption patterns for most of the industry will look different from the REITs. So to understand adoption we must pay to the context of technology decisions rather than the prevailing industry narratives.
I am currently researching next year's edition of 20 for 20. As usual, I am working to avoid popular industry narratives as I try to understand next year's operational and technology priorities. In the meantime, if you want to ground your perspectives in reality, I recommend asking a regional!
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