COMPETITION COOPERATION IN SOFT MARKETS.

Competition cooperation can help you gain new residents, and have a better sense of the market. Don't be afraid to talk to your competition, they may be one of your best sources of information.

A challenging market--whether soft, overbuilt or just plain dreadful--is not a fun place to be. The dog-eat-dog mentality in a soft market can bring even a seasoned apartment manager to her knees. And then there is the problem of explaining to owners, asset managers and off-site supervisors that the market is soft. The owners don't want to believe it, the asset managers don't care and the off-site supervisor doesn't want to hear it, because they have to answer to all of the above. So what is one to do? Take some strategic advice from Tina of Survivor fame. Cooperate with the enemy. Make your competitors your friends, your allies, your best buddies. Seriously. You want to stabilize your community in a soft market, then try enlisting the help of your toughest competition. Not only does this make your day-to-day operations less stressful, it can change the attitude and productivity of your team, generate traffic and leases, and bring a new positive outlook to your sub-market.

Make New Friends

If you are currently in a soft market, battling the distortion of numbers and the direct mail of your competitors, then you know from whence I speak. Nothing is more frustrating than doing a market survey, calling up your competition and having them tell you that they are 95 percent occupied when you know they are giving away two months free and sitting on 15 percent availability. I'm really not sure why this is such a common business practice in our industry, but it does nothing but damage. Thousands upon thousands of unheeded units have been built in markets where exaggeration was commonplace and created the illusion of a strong market. Because of inaccurate information, overdevelopment has occurred and created soft markets with incredibly slow absorption rates throughout the United States. By making friends with your competition you can share accurate information and begin to combat overdevelopment. And just because you become friendly, don't expect the direct mail or marketing to stop. That would be a poor business decision, but it is nice to have the competition call you up and let you know that you are being direct mailed, instead of hearing it from the mailman.

Begin breaking down the barriers that have built up over the years by opening yourself to a little scrutiny. Be honest, always. Do not deviate from this policy. Not only does it encourage your competition to be truthful, but it is less stress on you. Give accurate and up-to-date information whenever someone requests it. It is not going to hurt you to tell your competitors that you are 88 percent occupied and running specials, they're probably in the 80s and running specials too. When you are doing your market survey, offer your numbers first. Let your competitors know that you have an honesty policy and will always give accurate numbers and information to whoever asks. Take the time to go to your competitors with market survey information in hand. You and your competitor are working in the same situation, the same tough market with the same traffic and the same dilemmas. Misery loves company. Once you've assured your competitors that you will be honest and they agree to be honest, you are ready to move to step two.

Directing Traffic

Discuss traffic sources with your submarket. Have a meeting of the minds, so to speak. Potential renters are incredibly thorough in soft markets because there is so much blitz advertising and so many specials. The apartment renter realizes there are a lot of choices and will take the time to shop around. You benefit from the advertising done by the community next door because it brings traffic to the area. It is only good business to understand how your competitors market their product and what works. Both you and your competitor will benefit from these discussions and unless you are an anomaly, at 96 percent occupancy and 100 percent leased in a soft market, then every little bit helps. Discuss availability specifics with your strongest, most similar competitors. There is nothing wrong with sitting down with an availability report and discussing what size apartments you have available and when. Once you and your competitors familiarize yourself with each other's availability and are comfortable talking about it, you are ready to move unto the toughest phase. Now many from old school management styles will not agree with this at all, but we are here to tell you it works. Refer traffic to your competition and ask them to do the same. If you cannot lease to traffic, if you do not have the availability on a particular unit size and cannot meet their needs, then by all means sit down with the traffic and refer them to someone who can accommodate them.

This action will come back to you ten-fold. The first benefit you get is from the potential renter. They are amazed at your customer service and in wonderment that you would take the time to go above and beyond the call of duty, especially when you are not getting the sale. This apartment dweller will not soon forget your helpfulness and will most likely tell others. Word of mouth can make or break you in a soft market, especially if it is a small one. Why not make one more person happy? When this renter decides it is time to move again, where do you think they will come first? They come straight back to you, in hopes that you now have availability.

The next positive result you see is what helps you stabilize and improve your numbers. You get referrals back from your competitors. Once you open the gates to an open honest relationship with your competitors, and you begin giving them referrals, they will do it in return. When your competitor knows that you have availability in one-bedrooms for immediate occupancy and they have none, they will send the traffic to you if you have built a good working relationship. And the referrals you get are already pre-qualified and have a "good" feeling about you because the competition sent them; therefore you must be a great community.

Rules

There are a few rules you have to follow for this to work. First and foremost, never refer someone if you can possibly help him or her. That is an obvious one, but we would be remiss if we didn't put it down. Of course, you occasionally get the apartment shopper who will absolutely not lease without looking everywhere first; there is no harm in telling them who your competitors are. Number two; do not offer referral fees if your competition objects. Most off-site supervisors worry that an inexperienced leasing consultant might send traffic to another community to get the referral fee, especially if it is large. If you have an understanding about referral fees and incentives with your competition then it is fine, but for the most part it is a bad idea. You don't want the competition to turn around and offer your team more money to refer than you can pay in commission. Bringing your competition a candy surprise or a thank you card with a potted flower is a nice alternative. Number three; pick your competitors that you refer to wisely. If you know a community has poor customer service, unhappy residents or other major issues, don't send your customer to them. You want your customer to remember you for helping them make a positive move. Number four; under no circumstance use information gathered by "sharing" or discussing to infringe on someone's right to privacy. For example, you might find out that one of your residents is shopping around because you discuss traffic with a competitor. Do not call the resident, write them or approach them about their visit to the competitor. You might find this information helpful in reevaluating your renewal program but do not use it for any other purpose. You will only upset the resident and jeopardize your working relationship with your competitor. Make sure that your competitors agree to follow the same policy.

A strong addition to competition cooperation is to make friends with a few properties that you do not compete with directly. A community with a much lower rent structure and one with a higher rent structure are good sources of referrals and additional market information. Quite often apartment renters look above their means when apartment shopping and require referrals to more appropriate communities. The same can be said in the other direction, sometimes renters begin looking and realize they can afford and want quite a bit more then a particular community can offer. For this purpose, have a variety of communities' information available to share. You might consider having floor plans on hand for these communities and ask them to do the same.

Once you have a good program in place for referrals and an open, honest relationship with your competition and sub-market, you should begin to see positive results almost immediately. You will have more market information to make available to your owners. This information can help you and your company understand the market and how you can better perform. This will also prove beneficial in budget preparation. You will see a happier team as the business relationships develop in a positive way. Your team will be encouraged when they see accurate numbers for the market and realize they are not the only community struggling with occupancy. You will get great referrals and help customers when you give referrals. But the most wonderful result that comes from this type of business practice is that you make friends and allies in a battle against low mortgage interest rates, overdevelopment and a challenging market. You have a colleague that understands your stress, your obstacles and your frustrations. No, you probably will not and should not become best friends, but you can forge a fight together. You will be able to help each other where in the past you were just one more negative aspect in an uphill battle. Why not give competition cooperation a try and see the positive power in making your enemy your friend.

Sondrah Laden, CAM, has been in the multifamily industry for 12 years and is currently a Community Manager with Schaedle Worthington Hyde Properties at Oak Grove Apartments in Lexington, Ky Sheila Pennington, CAM, has been in the multi family industry for 17 years and is currently a Senior Manager with Fogelman Management Co. in Lexington and Louisville, Ky.

Sondrah Laden, CAM, has been in the multifamily industry for 12 years and is currently a Community Manager with Schaedle Worthington Hyde Properties at Oak Grove Apartments in Lexington, Ky.

Sheila Pennington, CAM, has been in the multifamily housing industry for 17 years and is currently a Senior Manager with Fogelman Management Co. in Lexington and Louisville, Ky.