Preparing for the AI and Data Revolution in the Multifamily Industry: What to Expect in 2024

Experts agree, the multifamily industry is poised for a transformative year in 2024. While economic uncertainty lingers, innovative technologies like artificial intelligence (AI) and data analytics are finally emerging as the game-changers the industry needs, promising to unlock new levels of operational efficiency, financial performance, and resident satisfaction. How these technologies will reshape the landscape for multifamily property owners, investors, and asset managers remains to be seen in full, but a few trends are clearly gaining traction.

Introduction to AI and Data Analytics in Financial Analysis

Financial analysis plays a crucial role in assessing the performance, profitability, and financial health of companies and investments. Traditionally, this analysis has been performed by financial professionals using manual methods and tools. However, with the advent of AI and data analytics, the landscape of financial analysis has undergone a significant transformation.

An introduction to AI and data analytics in the context of financial analysis involves exploring the fundamental concepts and technologies that drive this evolution and how they are reshaping the way financial professionals approach their work.

1. The Rise of AI-powered Financial Forecasting

AI-powered forecasting models are rapidly gaining traction, leveraging vast datasets of market trends, historical performance, and economic indicators to predict future rental rates, occupancy levels, and operating expenses with unparalleled accuracy.

The rise of these financial models has the potential to revolutionize the way multifamily properties make crucial business decisions. Gone will be the days of having to rely upon gut instincts and guesswork. With the help of artificial intelligence, forecasting models can transform the way property managers and investors forecast various factors like rental rates, occupancy levels, and operating expenses.

Forecasting data models are able to process vast amounts of data including market trends, historical performance, and economic indicators. This enables them to make predictions with an unprecedented level of accuracy. The ability to analyze and interpret such a wide range of information gives property owners and operators a significant advantage in understanding the future state of their investments and making well-informed decisions.

The speed and accuracy of data models will become even more impactful as acquisitions activity heats up in the new year. The Mortgage Bankers Association anticipates “a 19% increase in multifamily transactions” in 2024.¹ With greater trade volume the access to real-time data and analysis will gain even greater adoption from firms looking to adapt quickly to market changes and optimize their resources and strategies to stay ahead in a highly competitive environment.²

2. Data-driven Benchmarking and Performance Optimization

AI and data analytics are paving the way for hyper-personalized benchmarking that compares a property’s performance against similar assets within its specific market and competitive set.³ This granular level of insight will allow owners and operators to identify areas for improvement, tailor resource allocation, and implement targeted strategies to boost NOI (Net Operating Income). Operators who are able to identify underperforming amenities or inefficiencies in resident communication can leverage that data to implement targeted solutions that drive measurable improvements in resident satisfaction and retention.

3. Standardized Data and the Quest for KPIs

The multifamily industry has long struggled with data fragmentation and a lack of standardized metrics. However, 2024 is poised to see a surge in efforts towards data standardization and the adoption of key performance indicators (KPIs) that provide a clear picture of a property’s health. The new year could bring increased focus “on developing a unifying ecosystem to address disparate software applications,” notes Joya Pavesi, executive vice president of marketing and strategy for property management firm RKW Residential. “A unified ecosystem would not only streamline workflows but also enhance data visibility and accessibility, making operations more efficient and primed for intelligent, data-driven decision making.”

Enhanced data standardization will enable apples-to-apples comparisons across properties, empower investors to make informed decisions, and allow asset managers to track progress towards strategic goals with greater clarity and precision.⁴

4. AI-powered Resident and Prospect Outreach

The multifamily industry’s top of funnel outreach has been traditionally plagued by one-way communication and generic resident experiences. AI-powered platforms are now personalizing resident interactions, predicting needs, and proactively addressing concerns. Perq.com’s recent article, “5 Multifamily Technology Trends”, highlights the rise of “smart apartments” that can anticipate resident needs and automate tasks, from temperature control to package delivery. These technologies can target a specific resident’s preferences, offering personalized offers for a fitness class based on their activity patterns, or a maintenance notification before a potential issue arises.

Beyond the ability to use AI for engagement to occur during a renter’s occupancy, it will play a critical component in how prospects find their housing. As Igor Popov the Chief Economist of Apartment List states in the article “7 Key Predictions for the 2024 Multifamily Rental Housing Market”, ”we expect 2024 to bring a new wave of AI-powered tools specifically for renters. It will soon become commonplace for renters to use AI in their apartment searches to search, compare, and coordinate actions.”⁵ These data-driven interactions foster a sense of community, individualize interactions, improve resident satisfaction, and ultimately, boost rental and retention rates.

5. AI-powered Resident and Prospect Outreach

While AI promises immense benefits, its ethical implications must be carefully considered industrywide. Bias in data sets can lead to unfair algorithms, and concerns around data privacy remain paramount.

Multifamily industry leaders must prioritize ethical AI development and implementation, ensuring responsible data governance and clear communication with residents about how their data is used.

The year 2024 marks a pivotal moment for the multifamily industry, where AI and data are poised to drive a fundamental shift in the overall landscape. From optimizing financial performance to personalizing resident experiences, the impact of multifamily data analytics on overall performance is expected to grow exponentially. We anticipate AI algorithms to become even more sophisticated, allowing for more accurate predictions and advanced data analysis. Additionally, the integration of AI with other emerging technologies, such as the Internet of Things (IoT), will no doubt further increase the impact of AI on multifamily performance overall.

While AI has shown great potential to transform multifamily data analytics by automating processes, generating accurate predictions, and optimizing operations, we still have a long way to go before we can say that the full potential has been realized for the industry. We are still in the earliest stages of identifying – let alone implementing – the power of AI. Until property managers and asset owners are able to unlock their data, the ability to use AI applications to make more informed decisions and drive performance will be incremental at best. Nevertheless, for an industry that has traditionally lagged others in adoption and implementation of technology, 2023 saw tremendous advances and there is no doubt that 2024 will bring even more of the same.

1: https://www.globest.com/2023/12/29/optimism-for-the-2024-multifamily-market

2: https://origininvestments.com/origins-top-10-2024-predictions-for-multifamily

3: https://www.forbes.com/sites/forbesbusinesscouncil/2024/01/19/multifamily-housing-trends-to-watch-in-2024/?sh=5da09e71243b

4: https://www.multihousingnews.com/top-12-multifamily-predictions-for-2024/

5: https://www.bdcnetwork.com/7-key-predictions-2024-multifamily-rental-housing-market