Centralizing & Offshoring Operations

If one spends enough time talking with people who own and manage a lot of big apartment buildings, the topic of centralization will inevitably come up. Centralization refers to shifting management tasks and responsibilities from on-site staff to central back-offices which may then be moved offshore. Centralization has gotten a lot of attention in industry circles over the past year, and—according to the 20for20 Survey—centralization of on-site roles is a top priority for large multifamily owners this year.

Centralization is a hot topic in multifamily for two reasons:

• With rents softening in many markets—and rates continuing to climb—cutting operating expenses is one of the few levers real estate operators have left. Centralization and offshoring offer the biggest pull of that lever.
• New tech products have enabled more operators to move functions formerly performed on-site at the asset to central back offices—whether in the US or overseas—far more easily. Improvements in funnel management, maintenance dispatch, business intelligence, and visualization technology have all played a role.

Today, we’ll do a deep dive into how real estate operators have centralized their operations and cut costs through offshoring. Specifically:

• The roles that can be centralized;
• Technology products that can assist with centralization;
• The decision to offshore centralized operations;
• The challenges—and potential returns—of centralization and offshoring.

While this letter will primarily be focused on multifamily residential operations, many of the lessons are a fit for certain high-volume operations roles in sectors like single-family residential, office, and retail.