The multifamily housing industry is undergoing a period of significant transformation. Legal pressures are challenging traditional pricing practices, while advancements in technology are creating opportunities to modernize and streamline operations. This blog explores how operators can respond to these challenges by addressing legal and legislative issues, shifting focus from competitor data to first-party insights, and adopting modern revenue management systems to stay ahead in a rapidly evolving market. 

Addressing Legal Challenges in Pricing

The multifamily industry faces intense legal scrutiny. Key legal cases, including Department of Justice and class-action lawsuits, are reshaping PRM practices. At the same time, legislative efforts at federal, state and city levels are prompting discussions about the use of non-public competitor data.

These challenges have elicited varied responses from the industry:

1. Switching Systems: Many operators are transitioning to modern PRM platforms with enhanced features and capabilities and algorithms designed from the start to work well without specific competitor data inputs.
2. Hesitation Due to Optics: Some organizations are reluctant to adopt new systems, fearing public perception, even though such updates are perfectly legal.
3. Building In-House Solutions: A few companies are attempting to develop proprietary systems, often underestimating the complexity and costs involved.
4. Reverting to Manual Pricing: Some operators have turned to manual methods, but data consistently shows that automated systems outperform manual pricing by 3-8%.

These legal and legislative pressures are driving operators to reevaluate outdated PRM systems, many of which have remained largely unchanged for decades. Current rent growth challenges further underscore the need for innovation.

Moving Beyond Competitor Data

Competitor data has long been central to PRM, but its limitations have become increasingly evident. Issues such as data inaccuracies, delays and lack of context make it an unreliable benchmark for pricing decisions. Recent legal developments have also highlighted the risks of over-reliance on competitor data.

The solution lies in first-party data. First-party data empowers operators to quickly adjust pricing based on demand and supply signals. This approach ensures agility and accuracy, fostering better overall performance.

Internal metrics such as leads, leases, notices and renewals provide real-time insights, enabling operators to make more informed decisions by reflecting actual demand and supply conditions, offering actionable feedback on pricing strategies and supporting predictive analytics that anticipate future trends rather than reacting to past events.

Embracing Modern Revenue Management Systems

Legacy PRM systems, many of which were designed more than two decades ago, are no longer adequate for today’s challenges. These systems remain outdated, with clunky workflows and limited capabilities.

Modern PRM platforms offer significant advantages:

• Streamlined Workflows: Simplifying operations and reducing total cost of ownership
• Enhanced Capabilities: Effectively managing concessions, rent control, lease-ups and renovations
• Portfolio-Centric Design: Enabling strategic decision-making through data pooling across properties

By applying decades of industry insights, contemporary systems are not only more efficient but also better equipped to handle the complexities of today’s market. Operators have more choices now than they did then.

Charting a New Course

To navigate current challenges, operators must adopt proactive strategies that leverage modern tools and first-party data. This approach allows for:

• Greater transparency and improved decision-making
• Streamlined workflows that reduce operational costs
• Tailored solutions for unique challenges, such as rent control and lease-ups

The multifamily industry is at a pivotal moment. By addressing legal and market pressures head-on, operators can transform obstacles into opportunities. The future of revenue management lies in adaptive, data-driven systems that anticipate market shifts and empower operators to stay ahead.