LeaseCon/TurnCon Panelists Discuss the Benefits of Centralization

by Katie Sloan

To centralize or not to centralize? This is one of the hot questions in the industry today as more companies are making the move to centralize leasing and operations efforts. But what does it look like in reality? And is it the right move for your company? 

A number of industry professionals weighed in on the topic at Student Housing Business’ fifth annual LeaseCon/TurnCon conference, which took place December 4-5, 2023 in Charlotte, North Carolina. 

The panel discussion included Kendra Woodley, director of sales with The Scion Group; Phil Ginsburg, director of centralized sales with Cardinal Group Management; Jerry Wojenski, CEO of Varsity Campus; JT Bailey, vice president and student market general manager for RealPage; Joel Brovont, COO at Granite; and moderator Wes Deese, owner of Providential Student Housing. What follows is an edited transcription of the conversation. 

Deese: I want to first ask all of you about your journey into centralization. Kendra [Woodley], I’d like to start with you. The pandemic is what really brought this topic to the forefront, but The Scion Group was getting started with this prior to COVID-19. Tell us a little bit about what this journey has been like.

Woodley: We dabbled in centralization for a couple of years. It started with our summer leasing. In the summer, we’d have a team of employees that had finished leasing up their properties, which meant we had free resources that could be reapplied somewhere else. We started with four people, branched out a little bit more, and eventually had rotating teams of 20 people that flew to our Chicago headquarters, and that’s where the magic happened. Everyone had a phone at their table and their laptop and we sat in groups. We came up with a bunch of competitions and all worked together on the properties in our portfolio that were still leasing — often the hardest communities to lease in the most saturated markets, where concessions were being thrown out left and right, like thousands of dollars of gift cards. What we realized through this process is that the dedication and lack of distractions from residents coming in asking questions or needing to put in a work order was really beneficial. Those requests are all extremely important for our residents, but they are distractions for the onsite team from a leasing perspective. Prior to the pandemic, we had geared up to create a team at our headquarters, which has evolved by bringing employees of all different backgrounds into our centralized team, which are all now in Chicago. They sit on the floor and go through the weeds together. And it’s really allowed us flexibility with our resources. Our on-site team can really dedicate themselves to the resident experience.

Deese: And what about from the third-party management side? What has the journey been like for you?

Wojenski: Initially, our third-party clients didn’t really understand the concept. It is a novel approach. Overseas, it might be less novel than it is here, but in the U.S., companies are so used to the way things have always been done. When you introduce something that disrupts the traditional process, it can be a very uncomfortable thing. The way we’ve proposed the concept is that we have a SEAL team — which are experts in their specific fields of leasing or rent collections — and they can provide consistent service and better results for less money. We can now work on all of our properties at the same time with fewer resources because the process is centralized. And as a result, you can reduce your payroll. It’s a win-win — you get better service, better results and you save on your payroll costs through centralized services. Right now about 80 percent of the properties in our portfolio are under at least one of our centralized platforms. And the success and results speak for themselves.

Brovont: Most of our clients have actually never known anything other than a centralized process. Usually when we take on a property for a client, we’re doing all the leasing, operations and maintenance from a centralized office. One thing about our particular model of management is that we don’t load payroll or overhead onto the property. We charge a marginally higher property management fee, but that works better for the owner because we basically eat what we kill. And there is so much less risk and exposure to the property owner if we don’t perform.

Deese: So you have a scattered site template, and then you’ve got a portfolio of purpose built student housing. A lot of those properties are in secondary and tertiary markets. What is the difference in centralized services between those two types of properties/markets?

Brovont: Honestly, there isn’t a whole lot of difference between the two. One difference can be seen if we have one property by itself in a market. Obviously, that community has its own staff and we function as the front-facing employee. The on-site team will do some of the leasing and operations, but they usually don’t handle maintenance. We will dispatch from a closer centralized location for those issues. And we’re doing a lot of the leasing on the back end. 

Ginsburg: At Cardinal, we’ve taken a little bit of a unique approach and segmented our centralized roles. So we’ve got our centralized leasing, we’ve got resident services, we’ve got collections, and in the future, we’ll have some centralized maintenance efforts as well. It’s not one size fits all when it comes to centralized leasing or centralization in general. Allowing our clients to pick and choose services has been super beneficial for us because a client may start off with one service — maybe, for example, leasing and lead management. Through that process, they will recognize how much time we are giving them back, but that the team is now bogged down with another service — let’s say collections. So we can then expand our centralized offerings for the client to also cover collections. Having segments gives us the flexibility to manage as best as possible for each individual client. 

Deese: Are you guys utilizing any AI right now? I know that’s a buzzword in the industry today. 

Wojenski: You pretty much have to for centralized services in order to scale it and make it efficient on a cost savings basis. You have to control your payroll costs. It’s great to have experts in the field that are behind the scenes, but they need to be supported with some of the redundant tasks that can be handled by AI. We definitely integrate software and AI into our platform. That’s part of our strategy. And I think that was a challenge at first — how do we use these technologies? And it took a few months for us to figure out and streamline everything, but I think our directors of the departments for centralized financial services and leasing did a really good job utilizing AI to basically supplement their teams.

Deese: Bailey, from your standpoint, what’s some advice that you would give to folks on implementing centralization?

Bailey: We’ve called centralization a buzzword and I think that’s a great way to categorize it. Let’s say you line up operators and ask, ‘define centralization?’ ‘How are you doing centralization?’ If you do, you’re going to get four different answers. And that’s because centralization is not a product. It is a suite of tools, procedures and strategies that are utilized to achieve a goal of some kind. And so what I like to tell people is, before you dive into the idea of centralization, identify the problems you’re looking to solve and identify the outcome you’re looking for. Are you looking to reduce payroll? Or utilize underused employees at successful properties to cover for groups that have a higher workload or those that are having turnover problems? Or are you looking to offer a service as a third-party operator that can be a potential additional revenue center? There are so many ways to utilize the concept of centralization to solve your problems. Identify the solutions and outcomes you’re looking for first. If you truly understand what your ideal outcome is you set yourself up to have a more educated conversation with potential vendors or with your teams when looking to solve problems. 

Ginsburg: Don’t be afraid to try new tools. You’re not going to learn or figure out what tool is best for you and your company without trying things out. So don’t be afraid to try new things. Also never forget that you cannot build the second story of your house if your foundation is not done. It is much better to take an extra couple of months and build out your foundation to be rock solid before trying to progress forward. If you try to go back and make changes it might be a lot more costly and time consuming than you anticipated in the beginning. And the last thing I’ll leave with is be proactive, not reactive. In this industry, the more reactive we are, the quicker we have to chime in and try to solve something. The more proactive we can be with the tools that we’re testing and the teams that we’re working with, the better the results.

Woodley: One of the biggest things we’ve learned during the centralization process is that it’s okay to pivot a little bit. As I mentioned earlier, we dabbled in centralized processes for a while and it gave us a good understanding of what we wanted. We took that foundation and extrapolated it to create a 55-person team. And what we realized is that a six-person structure isn’t always the same as a 55-person structure. You can’t have 50 people in the same role and no growth patterns. Our centralized team looks a little bit different than it did on day one. Every year, we have a reflection period and make adjustments. Markets change drastically — you might have had to put more resources in a specific area that is no longer a problem, and vice versa. It’s okay if it’s not the same exact thing you thought it was going to be on day one. It’s not one size fits all.

Brovont: One of the lessons we’ve learned about centralization is that it actually frees up your people to do what they’re really good at. When you’re working onsite, you will get customer support questions — you have people calling or walking in, and they want to ask you all sorts of questions that really don’t have anything to do with leasing, but those employees are kind of like the front-facing folks in the building, so they get those questions. Having support systems set up on the backend frees those people up to just do what they’re good at — to go out there and get people on tours and get them to sign leases.

Wojenski: I think for us there were two important lessons that came about that we did not expect. And again, centralization has been a learning process for all of us. We were so focused on how we were going to structure it and who we were going to choose to be part of our team that we kind of forgot about the site level, and the challenges inherent with integrating the two. The first thing that came up with centralized leasing, for example, is that we have a team of great closers that are calling, following up on leads and getting leases signed. However, they still need the leads to come in, and those leads are usually coming in from the site level or through our digital advertising. So if you have a property that’s not bringing in new leads and new prospects or guest cards, then the centralized leasing team really can’t do their job and their function. So we realized that we have to fuel centralized leasing by making sure the site team and our digital presence is bringing in more and more prospects — even in difficult markets. So that was the first issue we came across. The second issue came a little bit later, surprisingly, and that was with the site teams. We didn’t realize that when we implemented centralized leasing, our site teams might be losing commissions or bonuses. It also hurt them a little bit on the ego side. They were asking ‘are we doing a bad job?’ And you have to explain to them that the centralized group is a support team to help them out. In the long term, the site team and centralized team working together are going to produce a better outcome and better results, and hopefully give the on-site team their summer back. We need someone onsite providing that human touch with residents still, and you have to make sure that you create an integrated structure where they don’t feel abandoned, and rather, they feel important and supported.

Deese: Let’s dig into what the structure and training process is like for centralization — especially for leasing — at your companies. 

Woodley: We have a team in Chicago that works together collaboratively. We started out with everybody in the same position and have evolved and developed a couple of different roles within the centralized team so that people are working in the positions they’re best at. A lot of our team members originally came from onsite positions at our properties, and sometimes it isn’t easy selling someone on moving to Chicago from a place like Starkville, Mississippi. We’ve devised an onboarding process that’s pretty extensive. One of our goals is to get a few people out every year from Chicago to the markets they lease in to better understand it. I think that’s huge for not only the training aspect of understanding the market, but getting that face-to-face time with our site teams. Every team member that has built a relationship and connection with their site team comes back working together so well. They really have a greater appreciation for the onsite teams when they visit our properties — especially if they have not worked onsite before. 

Deese: Do you shift your team’s attention to different properties throughout the year? We’ve seen a lot of leasing velocity in the Tier 1 markets. Do you transition your team from Tier One, to then Tier 2 and Tier 3?

Woodley: We look at the season as a whole for each of our properties. We know that some of our communities are really hot and are going to need a lot of attention in January, and this evolves and shifts throughout the year. We like to think of our leasing positions as a 365-day job. We play around a lot with our property assignments and try to be flexible as markets change and evolve. It’s nice to keep it to where we can shift five people to a property if we really need to. 

Deese: I’m old school, so the call center resonates with me. But we’ve got folks at their homes and coffee shops. How does that work?

Ginsburg: Honestly, it’s fantastic. Hiring is such a crucial process, as is finding people that you trust. I give my team complete autonomy and complete trust. I know that the work is being done from 9 am until 8 pm — I have employees on the East Coast, West Coast and every timezone in between. We’re not an owner-operator, so we don’t get the luxury of being able to just throw additional support where needed, but we don’t do dedicated specialists. We’ve got eight specialists working across 31 different sites, and they’re all available at any time. They’re operating from a custom-built contact center from Rent Dynamics, which streamlines all current information. They [Rent Dynamics] were recently acquired by Entrata, so all of that Entrata data that a remote sales team member might need is now available to them. We also have a 30-minute standing call every day around lunchtime. We hop on as a team and we just chat, get caught up and talk about big company updates — anything that’s going on with them. We try to travel — not necessarily to the sites but as a group to get the entirety of the team together. We have eight employees on my sales team. There’s another 14 on our operations team. Our entire centralized model covers 30 people, so our operating model is a little bit different from that of an owner-operator because we don’t have the luxury of having that centralized environment or being able to make those decisions on the fly. But having a remote team and being completely empowered and knowing that they’re doing the best work possible because they’re so bought into the process has been huge for us. It’s all about empowering your people to make their own decisions and to know that they can get the work done. And that they feel comfortable and safe reaching out and asking for help. I think so often our team members don’t want to reach out to their supervisor or ask a question because they want to feel self-sufficient. We want to be your champion and we want you to feel like you’re winning each task.

Wojenski: For us, we realized quickly that jumping from property to property was not the most efficient way to conduct business. When I was prepping for this panel session, I asked a member of our team Ashley, ‘what are some of the things that you’ve learned in your role, being the person who’s calling and closing these deals?’ And she said that you really have to block out time and just focus on one property at a time. You just can’t be jumping around back and forth. When you’re focusing on one property, you might have, for example, an immediate move in and you have to communicate to the site level right away to make sure that that room is going to be right for that resident. Otherwise, you just close the lease and the site level is not prepared and they have someone showing up with bags in a few hours. So they definitely have a specific set of properties assigned to them, but they work on those properties in blocks of time. 

Deese: Let’s talk about return on investment. How long are you seeing between rolling centralization out before it’s making an impact on the property budget and bringing in revenue for the management company?

Ginsburg: At Cardinal, we started and kicked off all our centralized efforts a little over a year ago. We were able to go revenue positive across all of our offerings in 11 months. That was just due to the way that we’ve structured our offerings. We started on the operations side, which allowed us to charge a little bit more for the service offering. Pair that with an AI tool that’s now collecting more rent, your management fees are going up every month. That was a big lift for us right off the bat, and then integrating and implementing the sales efforts.

—Edited transcription by Katie Sloan

This article was originally published in the January/February 2024 issue of Student Housing Business magazine.

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