Improving the occupancy rate of properties is one of the most important issues for rental property owners in the Tokyo metropolitan area. Even in the Tokyo area, where the population continues to inflow, vacancy risk is always present due to the increase in new supply and the diversification of needs. One solution to this problem is the use of management companies that provide both management and brokerage services. By entrusting management to a company that has both management and brokerage capabilities, synergistic effects can be expected, such as shortening vacancy periods, stabilizing rental income, and improving tenant satisfaction. This article explains the specific merits of this approach with examples and data. Finally, we will clarify why "choosing a management company that can also act as an intermediary" leads to stable occupancy rates and earnings over the long term.
When the management company and brokerage company are separated, property management (rent control, facility maintenance, etc.) and tenant solicitation (advertising, viewing response, etc.) are performed by separate personnel and companies. In contrast, in the integrated management and brokerage system, one company acts as the owner's agent and handles everything from tenant solicitation to post-contract management. This creates the following synergies and directly leads to higher occupancy rates
Significantly shortened vacancy period: A combined management and brokerage company can immediately begin recruiting tenants when a vacancy occurs, dramatically shortening the time between the start of recruiting and the signing of a contract. For example, according to data from 2023, the average recruiting period in Tokyo's 23 wards is approximately 4.55 months (135 days), but in our case study, the contract was signed in about one month on average. This difference translates to more than 3 months in terms of rental income, which is a great advantage for owners. In fact, if a room with a monthly rent of 50,000 yen is vacant for 4 to 5 months, the owner loses approximately 300,000 yen in rental income, and if the owner also has to pay advertising fees (AD) for recruitment, the total opportunity loss could be 400,000 to 500,000 yen.If the vacancy period can be kept to 1-2 months byentrusting the property to an integrated management company, such lossescan beprevented and rental incomecan bemaintained.
Maintain reasonable rents and stable income: With integrated management and brokerage, the leasing staff is well versed in market trends and understands the attractiveness of the property and competitive rents, allowing them to set appropriate rents and implement flexible recruitment strategies. If vacancies persist for a long period of time, rent reductions must be considered, but with integrated management, tenants can be secured quickly, making it easier to sign contracts at reasonable rents while avoiding easy rent reductions. As a result, the rent level can be maintained without sacrificing the surface yield, leading to stable long-term earnings. In addition, by sharing information between the brokerage and management departments, it is possible to take a proactive approach, for example, to begin recruiting new tenants ahead of time when a move-out notice is received. Minimizing vacancy periods increases annual occupancy rates and stabilizes cash flow by reducing fluctuations in rental income.
Improved tenant satisfaction: By having both management and brokerage services provided by one company, we are able to provide consistent services from pre-tenant to post-tenant. The same company is responsible for everything from property guidance at the time of application to contract signing and post-occupancy follow-up, providing tenants with a single point of contact and a greater sense of security. Careful handling of prospective tenants is smoothly transferred to the management after the contract is signed, reducing mismatches and problems such as "this is not what I was told. In addition, it is easier for the management company to respond promptly to complaints and requests from tenants, resulting in higher tenant satisfaction. Tenants with a high level of satisfaction tend to stay in the property for a longer period of time, and the lower move-out rate (longer tenancy) provides the owner with a stable rental income. This improvement in tenant loyalty is another merit of integrated management and brokerage operations.
As described above, strengthening the cooperation between management and brokerage creates a virtuous cycle of shorter vacancy periods, rent maintenance, and tenant retention, which directly leads to higher property occupancy rates.
The rental market in Tokyo and other metropolitan areas is in high demand, and the average occupancy rate is around 95%, one of the highest in Japan. However, even in such urban areas, occupancy rates vary depending on the management approach used. Companies that integrate management and brokerage services often achieve higher occupancy and occupancy rates than others.
For example, according to data from a survey conducted by a real estate industry organization, the occupancy rate is approximately 3% higher for sublease properties than for properties managed under a standard outsourced management contract. In the Tokyo metropolitan area, the average occupancy rate for outsourced management contracts is 94.4%, while the rate for subleased properties is an extremely high 97.3%, indicating that the property is virtually fully occupied. The sublease method is a model in which the management company rents the property and subleases it to others, but the management company itself is responsible for finding customers, which is similar to the integrated management and brokerage operation, and is highly effective in reducing vacancy risk.
In addition, a management company with its own brokerage divisioncanprovide property owners with more realistic information and proposals for improvement. For example, when a vacancy occurs, INA&Associates promptly provides feedback to the owner on the vacancy situation of competing properties in the neighborhood, market rents, and feedback from previewers, and takes appropriate measures such as reviewing the vacancy conditions and proposing renovations. As a result, there are many cases where high occupancy rates are maintained even for older properties. In the Tokyo metropolitan area, the number of successful cases in which high occupancy rates have been achieved through such meticulous management-integrated operations has been increasing every year.
The above examples show that entrusting management to a company that integrates management and brokerage operations directly leads to highly competitive and stable management, even in the Tokyo metropolitan area. The difference in occupancy rates can be seen in comparisons with other companies, making the company a reassuring partner for owners.
In recent years, the introduction of digital technologies such as CRM (customer relationship management system) and preview DX has been attracting attention as a way to further develop the strengths of integrated management and brokerage. Leading management companies are leveraging technology to improve operational efficiency and occupancy rates and maximize revenue.
◎ Utilization of CRM (Customer Relationship Management): By implementing a CRM system for the real estate industry, information on prospective tenants (leads) and existing tenants can be centrally managed, enabling appropriate follow-up sales and service provision. Specifically, the attributes, desired conditions, and past response history of prospective tenants who have made inquiries are stored on the CRM system and shared with all staff members in charge. This will lead to "speedier initial responses to inquiries" and "building trust through consistent responses," thereby improving the closing rate. In fact, in the real estate industry, an increasing number of companies are using CRM to efficiently manage customers in order to increase the contract signing rate in response to the increasing number of inquiries received via the Internet. For example, one management company has introduced CRM to drastically shorten the time required to respond to inquiries by e-mail and telephone, and is differentiating itself from other companies by offering quicker proposals. As a result, the rate of conversion from preview to contract (yield rate) has increased, shortening the vacancy period and raising rental revenues. CRM is also effective in dealing with existing tenants. By keeping and analyzing the history of responses to tenant inquiries and complaints, it improves the quality of service and contributes to higher customer satisfaction. Improved satisfaction also leads to higher renewal rates, which in turn contributes to maximizing long-term revenue.
◎ Introduction of Digital Preview DX: In order to shorten the vacancy period and increase the closing rate, it is essential to improve the efficiency and sophistication of the "internal viewing (property inspection)" process. In recent years, many management companies and brokerage firms have introduced digital technologies such as VR and online previews, which allow prospective tenants to view 360-degree images of the interior of a property online, from the comfort of their own homes, even if they are far away. On the other hand, online preview is a method in which a person in charge of the property provides a tour of the property in real time via a video call from the site. These DX previews greatly alleviate time and geographical constraints. For example, it is no longer necessary to visit a property during the weekday to preview it, and even busy professionals or those who plan to transfer from a remote location can easily view and compare multiple properties. In the SUUMO case study, the introduction of VR content dramatically improved the ability to attract customers, resulting in more prospective viewers. The number of contract signings is likely to increase as the number of previews increases, leading to a faster resolution of vacancies. The prevalence of online previews is also increasing year by year. According to a survey conducted by Recruit Sumai Research Institute, the percentage of those who have experienced online previews reached 27.5% in the Tokyo metropolitan area in FY2021, an increase of approximately 8 percentage points from the previous year. In particular, more than 20% of the respondents decided to sign a contract solely based on online previews, indicating that digital previews have quickly become commonplace following the Corona Disaster. Management companies that are responding to this trend are simultaneously shortening vacancy periods and improving customer satisfaction by producing VR tour videos of properties and developing remote guidance systems such as Zoom. The preview DX not only improves efficiency, but also enhances the property search experience for prospective tenants by allowing them to preview the property anytime, anywhere, and is a factor that differentiates the property from other properties. As a result, the company expects to maximize revenues through early contract signings, higher occupancy rates, and reduced advertising costs.
As described above, the advancement of customer management through CRM and the use of DX for previews are measures that further boost the benefits of integrated management and brokerage operations. A management company that proactively implements these measures will be able to optimize complicated recruiting and management tasks that the owner cannot handle on his/her own with the power of digital technology, and will be able to maximize the profit potential of the property.
In the metropolitan rental market, where the business environment is changing and competition is intensifying, cooperation between "management" and "brokerage" is indispensable to maintain stable, full occupancy management. If you entrust the management of your property to a management company that can manage and attract tenants in an integrated manner, you can shorten vacancy periods, maintain rents, and increase occupancy rates by improving tenant satisfaction, which will directly lead to stable long-term earnings for the owner. As seen in actual cases, properties that maintain high occupancy rates (occupancy rates) through integrated management significantly reduce vacancy losses and opportunity costs, thereby increasing asset value. In addition, a management company that also incorporates advanced technologies such as CRM and VR previews can expect more efficient and higher quality operations.
Conversely, conventional operations that separate management and brokerage are prone to delays in information transfer and mismatches in response, leading to the risk of lost opportunities. Owners who are suffering from prolonged vacancies and repeated rent reviews may want to change their mindset and consider the option of a management company that can also act as an intermediary, but does not enclose information.
Finally, we would like to emphasize that choosing a management company that can also act as an intermediary as a partner will lead to stable property occupancy rates and earnings in the future. A company that can provide a one-stop service for property management will act as a reliable advisor to the owner, proposing optimal operations in line with market trends and helping to maintain and increase asset value. Owners in the Tokyo metropolitan area who are facing challenges in improving occupancy rates should proactively consider outsourcing to a proven management company that integrates management and brokerage services. This will be the first step toward long-term stable management.