This story is the third in a series looking at the impact of recent tech-focused layoffs on the multifamily sector. Click here for the first article and here for the second article.
Right now, it feels like there are two different economies.
Despite the Federal Reserve’s attempt to cool inflation with interest rate increases, the job market remains persistently tight. Case in point: U.S. employers added 517,000 jobs in January, pushing unemployment to 3.4%, a figure not seen since 1969. But then there is the other side — 392 tech companies have shed a total of 108,901 jobs in 2023, according to the website Layoffs.fyi.
For companies struggling to find employees, these layoffs may provide an opportunity to add scarce talent. “When companies [have layoffs], a ton of available talent gets released in the pool,” said Austin Lo, CEO of New York City–based virtual tour platform Peek.
Unlike 20 years ago, there may now be a home for some of these workers in the multifamily sector. Over the past decade, especially since COVID-19 hit, the industry has increasingly adopted tech systems, creating the need for tech-savvy talent. Although there may be some obstacles, the apartment industry’s relative stability could be attractive for tech workers.
“Most of the companies that we're working with are still hiring,” said Rick Goldberg, vice president of sales at Anaheim, California–based smart technology solutions company Arize. “They might not be expanding in certain parts in their technology departments. But overall, they're looking to fill some key tech roles.”
Tech adoption increases
The last couple of years have been a time of tremendous technology adoption in the apartment industry. At least partially prompted by social distancing during the pandemic, apartment operators have increased their use of tech-based solutions like virtual tours, smart home products and apps that allow renters to do everything from scheduling maintenance to reserving a machine in the gym.
“The real estate world has always been a little slow to embrace technology, especially on the operational side,” said Mike Madsen, vice president of acquisitions and economics at Salt Lake City, Utah–based RealSource Properties. “But it's changing quickly.”
Some bigger companies, including the REITs, are moving past traditional vendors and building technology systems in-house, making them potential landing spots for tech workers. For instance, Palo Alto, California–based Essex Property Trust is rolling out a proprietary revenue management system.
“As owners and operators are increasingly focused on improving their operational efficiency and resident satisfaction, it's possible that they may look to hire experienced technology professionals to help them achieve these goals,” said David Bitton, founder and chief marketing officer of Miami-based property management software provider DoorLoop.
Bitton specifically points to tech workers with experience in software development, data analysis and management, and digital marketing as good candidates for building and maintaining systems for apartment industry owners.
“These workers could bring a wealth of knowledge and experience to apartment owners and operators looking to improve their internal systems, such as property management software, marketing automation tools and data analytics platforms,” Bitton said.
Roadblocks to hiring
But even with the industry’s progress on the tech front, more work can be done, creating even more potential opportunities for tech workers. “At the higher-income technical levels, I think there is endless opportunity for modernizing how the multifamily sector operates,” said Bobby Lee, CEO of Los Angeles-based JRK Holdings.
But Lee wonders if some apartment owners will make the necessary investment in tech and new talent. “I wonder how committed our industry can be to making sizable cash investments to achieve very long-term gains,” Lee said. “Multifamily is a value-based, cash-flow-focused industry, and tech investments are usually very short-term dilutive.”
Strong competition for workers leads to high salaries — something many multifamily companies may be unable to stomach, especially in a higher interest rate environment.
“It will depend on the specific skills and experience of the workers who were laid off, as well as the specific needs and priorities of the apartment owners and operators,” said Christopher Yip, a partner at Park City, Utah–based venture fund RET Ventures. “It is also possible that the competition for these talented workers may be high, as other companies in different industries may also be seeking to hire workers with similar skills and experience.”
Still, careers in multifamily, particularly on the operational side, could offer one big advantage to tech workers: stability.
The tech industry has hit several rough patches in the past, and some leaders in the apartment industry think multifamily might prove a respite for workers tired of boom-and-bust cycles. “The multifamily industry has persisted through multiple recessions the last few decades,” said Arize’s Goldberg.
Although real estate itself is highly cyclical, rental housing, especially on the operational side, has held up fairly well through previous recessions.
“The multifamily sector offers steady employment opportunities regardless of what is going on with interest rates or the economy, especially for entry-level administrative and technical professionals, whether directly at a property or for our outsourced contract vendors,” Lee said. “There really is almost no variability in the workforce needs in different economic conditions other than monthly seasonality.”
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