It's that time of year again! The sun is getting a bit higher in the sky. Leasing season is around the corner. And we at D2 are once again proud to announce the release of our annual 20 for '20 report, which is now in its third edition. For those unfamiliar with the paper, 20 for '20 summarizes the content of 20 interviews with senior multifamily leaders: ten heads of operations and ten heads of technology. Its raison d'être is to provide an outlook on operations and technology for the next year and beyond.

In interviewing the 20 participants, we try to form a comprehensive view of the previous year's events. In this case, there was plenty to talk about, given that the previous year was 2020! The paper delves deeply into what happened since the pandemic started, what changed, and what the implications might be for what comes next in multifamily. In this post, the first of several highlighting findings from the research, we will share a few initial findings.

Five Takes on the COVID Stress-Test

The COVID-19 pandemic placed an unprecedented stress test on operations. The good news is that operators were able to come through it. In our 20 interviews, we covered broad ground and many different experiences and learnings. This post will summarize the most common views on the COVID stress test and what management learned from it.

1. COVID Stressed Teams And Communications

Going contactless was an obvious source of upheaval both for corporate and property operations. But while corporate operations adapted quickly to a new normal dominated by Zoom, MS Teams and the like, operators reported that they had underestimated the impact of the pandemic on property teams.

The experience of radically changing processes while following protocols to keep residents safe was already a lot of change. That many associates were balancing this with new child care arrangements at home made the COVID experience much harder for property teams than their corporate counterparts. The civil unrest of the summer of 2020 provided an additional stressor as the direct impact on downtown properties and the indirect cultural impact on teams all took their toll.

Several operators felt that they had not planned adequately for the levels of stress at properties and had to react quickly, implementing more frequent and more collaborative interactions between management and staff. The focus on over-communication extended to residents and ultimately to investment partners, as some policy decisions (e.g., the charging of late fees, closing of facilities) had implications for all stakeholders.    

2. It Doesn't Appear To Have Stressed Cybersecurity

Having read the NMHC/One11 Group research into technology use in multifamily, we were aware at the time of the interviews that cybersecurity and privacy were the highest priority issues for multifamily operators. It seemed logical that the rapid shift to a fully digital workplace would heighten these concerns and become a greater focus during the pandemic.

The findings did not match the intuition. With only a couple of exceptions, companies did not see cybersecurity as a bigger priority than they had before the pandemic. Nor did most companies deviate from the cybersecurity plans that they already had in place. The general feeling was that existing plans (often designed to meet high standards imposed by investment partners), were sufficient to handle even a fully digital environment.

3. It Revealed Something About Large Operators And Large Vendors

As we discuss extensively in this year's paper, COVID has changed how many operators think about leasing. In many cases, this is either causing operators to consider or accelerate their adoption of new CRM platforms. This resurgence in best-of-breed is mostly about the desire for new functionality to support an evolving leasing model. But it also has a lot to do with the nature of the relationship between large operating platforms and large vendors.

A large operator, for example, may need a significant change to its CRM platform to support a change to its leasing model. But despite being a large operator and hence a large customer, its size in the context of the enormous userbase of its software is small, due to the industry's fragmented nature. Many innovations are to do with efficiencies that accrue to larger companies. But when the technology has to move at the pace of a huge base of relatively small companies, operator and vendor interests become less well-aligned. As we discuss in the paper, this dynamic appears to be impacting decisions relating to leasing technology—a substantial part of the multifamily stack.  

4. It Got The Adoption Of Some Technologies Over The Hump

If there is a silver lining to the immediate aftermath of the initial lockdowns (we will talk about long-term benefits in the next sections), it is the bump in adoption for some technologies. Electronic payments were a beneficiary of this trend as companies who had tried for years to go 100% paperless were able to do so. When communities implemented mandatory contactless payments, they finally changed the habits of the surprising number of residents who still insisted on paying their rent with a paper check.

Corporate BI initiatives also benefited from the enforced abandonment of paper, as well as the office environment. Dashboards and other reporting capabilities that had previously been neglected by their intended users found new popularity during the pandemic.   

5. It Has Put Efficiency Front And Center For 2021

Finally, throughout the 20 conversations about the COVID's impact on 2021, there was a strong theme of the need to drive greater efficiency. There are a couple of obvious drivers: first, there is the desire to return to pre-pandemic levels of growth and performance. The industry has shown remarkable resilience through the downturn, maintaining much higher collection rates than most dared to expect.

The other driver is opportunity. The rapid change and the reinvention and iteration of processes that became features of property management 2020 have created new and, in many cases, more efficient ways of working. Operators will look to take as many of those efficiencies as possible to the bank in 2021.