Performance Benchmarking: It’s Not Just Apples to Apples

Comparing apples to oranges in most cases is a study in futility. Fitting a round peg into a square hole usually isn’t possible. But in multifamily, equating two properties in different asset classes through benchmarking can offer some valuable insight, and even an opportunity to compete on a playing field that may seem uneven. RealPage Industry Principal Andrew Bowen describes how in the recent webcast, “Benchmarking and Business Intelligence: Stay Ahead of Your Asset Strategy.” He shows the way a renovated Class B property can compete for higher rents that a competitor’s Class A community generates in a similar geography. The example is one of a few that he and industry expert Tracy Saffos outline in describing why leading asset managers and property managers are leveraging business intelligence and benchmarking tools to drive portfolio performance. Understanding the market through benchmarking Benchmarking allows properties to compare asset performance within or out of a certain geography to peers, typically within a particular asset class. It is a growing trend in multifamily which leverages lease transaction data to see how similar properties compare on lease rate, retention, amenities and other operational factors. In the case of the B property – which compares in Bowen’s example to an A asset in size, age of construction and building type within close proximity regardless of submarket – an analysis of in-place rent and executed rent differences can make a case for a renovation and a good return on value-add capital. Bowen said many in the industry are deciding whether or not they renovate – and how much – using RealPage’s vast repository of lease transaction data to determine a return on investment. “Our partners who are leveraging benchmarking for renovation are better able to determine what the market will bear for them, which means they are making more informed decisions about the ex...