multifamily centralization

The Glass Ceiling of Centralization

Let’s talk about multifamily centralization (everybody else already is). It’s been gaining momentum for the past few years, so, you probably have some familiarity with the concept by now. Chances are many of you are already using some form of centralization in your operations today.

Let’s start with a quick overview:

Why the Push Towards Centralization?

No one can deny that we ask a lot from our onsite teams. The general expectation is,  jacks of all trades (and masters of none), balancing responsibilities across marketing, sales, maintenance, customer service, and more. These high-demand positions have contributed to labor shortages and increased employee turnover across the industry. Centralization emerged as a way to combat these issues.

Historically, staffing in multifamily has relied on what we’ll call “generalists” who are asked to perform a variety of jobs outside their wheelhouse (see above), rather than leveraging each individual’s experience and strengths.  

Centralization, however, allows an organization to eliminate a dispersed workforce in favor of specialized workers who can provide specific services, as needed, virtually or in-person. Specialization allows workers to focus on a certain area of the business and offer expertise in their field. The goal is to enable the workforce to work faster and cut costs.

Is This Realistic?

In theory, this sounds like a great idea. Who wouldn’t want a seemingly surefire way to solve the industry’s widespread issues around staffing, onsite inefficiency, and rising costs?

Before you drink the centralization Kool-Aid, it’s essential to carefully consider the challenges of going all-in on centralization, and don’t believe this to be the silver bullet that will magically solve all of our operational struggles.

The Journey of Multifamily Centralization

Before asking if centralization is right for your organization, Let’s take a look back at how we got here in the first place. Centralization in multi-family appeared in three different phases.

Phase One – accounting activities migrated from individual properties to a central office through technology that could receive and code invoices while providing a web interface for a community manager to review and approve payments. This allowed the onsite teams to spend less time on administrative duties and focus more time on leasing and resident relations.

Phase Two – started about a decade ago with outsourcing leasing calls to call centers, freeing up leasing agents’ time to focus on follow-up and closing leases. The COVID-19 pandemic further accelerated Phase Two, as leasing agents had to deploy virtual tours for prospective residents. Virtual tours are gaining popularity, with some envisioning a permanent hybrid approach, or even the complete elimination of in-person tours.

Phase Three – is just starting to present itself through centralizing maintenance

These days, centralized maintenance is quite the buzzword. For those who have tried this approach already, they know it’s easier said than done.

While leasing agents possess transferable skills that can be applied across different property types, the same cannot be said for maintenance personnel. Different property types, amenities, and equipment require specific skills. Needs fluctuate, leading to challenges and unique demands for maintenance technicians in each scenario.

Staffing maintenance experienced technicians is more difficult than any other role at a property. According to the National Apartment Association, turnover among maintenance technicians reached 39 percent in 2018 and continues to rise. The simple shortage of qualified, willing workers and the constant turnover can certainly justify the desire to move to centralized maintenance.

However, before taking the centralized leap, consider the possibility that the real inefficiency might lie in the way in which operators have deployed their maintenance teams. Most have been utilizing them in the same way for a long time. Historically speaking, we expect them to be experts in everything from HVAC, plumbing, electrical, appliance repair, carpentry, trash hauling, swimming pools, and more (this goes back to the generalist vs. specialist explanation from above). Because they may not know the most effective and/or cost-efficient techniques, there’s potential for labor, time, and resources to be squandered in the process.

Many have chosen a hybrid solution. They continue to manage a majority of maintenance responsibilities in-house, while contracting an outside vendor for more specialized tasks.

This raises a key question – if you want to centralize maintenance, how many properties in any given geographic area are needed to efficiently employ maintenance specialists who can move between properties and stay busy, and what technology is needed in order to automate this process?

Challenges of Centralization

Here are some additional questions to ask yourself before you decide to go all-in:

  • Have you performed the cost/benefit analysis?
  • Are the properties close enough to make it worthwhile?
  • How much time can you spend on travel before you lose the benefits of centralization?
  • Have you accounted for slower response times for all work to be completed?
  • Have you considered how this could affect resident satisfaction?
  • Have you accounted for additional equipment costs?
  • Have you accounted for extra travel costs?

Leveraging operations technology with smaller on-site teams still proves to be the best option

Where does Leonardo247 fit into all of this? Leonardo247 offers the compliance, consistency, and performance that a centralized model promises at a fraction of the cost. but, size, location, and unique property profile have no bearing on Leonardo247’s ability to deliver the best overall operations, risk mitigation, and preventative maintenance programs across your portfolio. This is something neither the traditional model nor the fully centralized model can promise.

Before jumping into the centralization waters without a raft, look into Leonardo247’s hybrid approach.

Leonardo247 delivers daily, real-time direction to your on-site teams while providing you with real-time visibility into their compliance. The Leonardo247 automated platform saves time, allowing for smaller teams on-site. It helps manage geographically dispersed workforces by allowing supervisors to see pending work across all properties in their portfolio. It enhances efficiency, productivity, and accountability by tracking completions and reporting results. Our on-demand instructional videos and brochures help those who need guidance to complete work faster.

The centralization solution isn’t a one-size-fits-all journey. While the temptation of centralization may beckon, the wisdom of a “crawl, walk, run” approach cannot be underestimated.

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