By all accounts, 2021 was a banner year for Drucker + Falk, a family-owned apartment operator based in Newport News, Virginia. The company, ranked No. 45 on the most recent National Multifamily Housing Council list of Top 50 managers, hitting high watermarks in profit, revenue and number of units managed.
Drucker + Falk’s decision to move into institutional management drove that growth. Throughout its 84-year history, the majority women-owned company mainly catered to smaller, private family owners. In the past, these larger landlords flocked to national companies that could handle their entire portfolio. But that is changing, according to Kellie J. Falk, managing director for Drucker + Falk.
“Now it seems that some of them are turning to regional management companies because they like that expertise in that local area,” Falk said. “We've been more open to it and catering to it.”
But just because Drucker + Falk is coming off a strong year doesn’t mean the company isn’t facing challenges. For instance, it had more than 200 open positions – mostly in maintenance – as of press time.
Here, Falk talks with Multifamily Dive about the challenges of filling these jobs, where Drucker + Falk is recruiting and migration to the South during the pandemic.
This interview has been edited for brevity and clarity.
MULTIFAMILY DIVE: What are the challenges of finding maintenance workers?
KELLIE FALK: It's hard because the construction business is booming. Where I have offices, it's more profitable for a person to work in construction or as a subcontractor than in the apartment industry.
We go to technical schools. We go to high schools. We're recruiting retired military. We're trying all kinds of things, but it's still a struggle. Everybody is doing the same thing. We're all in the same boat.
What other ways are you working to retain talent?
We’re having conversations with HR about retention tools and not just focusing on increasing salaries. When possible, we’re considering allowing people to work from home one day a week.
But logistically, for some of the roles, it doesn't work. But for some roles, it does. So we’re looking at corporate positions as well as site positions and how we can make it work.
As a result, we have made some changes to our dress code, screening background criteria and office hours.
With inflation rising and food and gas getting much more expensive, are you seeing residents push back on rent increases?
We haven't gotten pushback yet, but I anticipate it probably happening. For the two years of COVID, we didn't touch rents. We left them the same. We didn’t do any increases at renewals.
We are hearing the general public believes rents have increased by 20% in one year. However, we did not increase any rents during COVID-19. On average, a market will experience around 6% rent growth in a year. So, now you’re at 12% for the last 2 years, which is the normal annual rent increase. However, I do not believe rents will increase by 20% next year. We cannot sustain that increase in rent growth.
With that being said, we have had strong rentals in our southern cities. Many new residents are relocating from crowded northern cities to areas closer to family and less dense populations.
And they’re bringing those salaries with them?
People are working from home and have the flexibility to live in places like Raleigh, North Carolina (where the company’s Shellbrook property, pictured above, is located), or Charlotte, North Carolina. We’re experiencing stronger markets in locations that previously were challenging, like Myrtle Beach, South Carolina. Nobody wanted to live in Myrtle Beach back in the day. Now, everyone wants to live in Myrtle Beach. Most of the newer product is getting close to $2 a square foot.
If companies start calling workers back, some of those rents have to go down, right?
Surprisingly, many of the renters are older, not retirees, but 50’s and up. And they aren’t moving back. Of course, the younger renters will have to return to employers.
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