Centralization in multifamily real estate: Challenges, opportunities, and the path forward

In multifamily real estate, centralization has emerged as a transformative strategy. From streamlining operations to enhancing resident experiences, the concept is reshaping how properties are managed and marketed.

But, as with any major shift, centralization brings its own set of challenges. In this blog, we’ll explore the current state of centralization, the role of technology, and how multifamily professionals can navigate this change to build more resilient, efficient, and resident-centric organizations.

Understanding centralization: What it means for multifamily

Centralization refers to the consolidation of operational functions—such as leasing, accounting, customer service, and marketing—into centralized hubs or corporate teams.

According to a research report from the National Apartment Association (NAA), sponsored by MRI Software, the approach is gaining traction across portfolios of all sizes, and 63% of operators plan to expand centralized operations within the next five years. Centralization is not perceived as an industry disruptor, with only 11% of survey respondents rating it as a highly significant challenge.

At its core, centralization aims to improve consistency, reduce costs, and boost efficiency. For example, back-office functions like collections and finance are increasingly being moved to corporate teams, while front-end leasing is being enhanced through AI-powered tools like self-guided tours.

The role of technology: Enabler and equalizer

Technology is the backbone of successful centralization. From AI-driven leasing tools to standardized lease forms and automated maintenance scheduling, PropTech solutions are helping multifamily operators streamline workflows and improve resident services.

At the MRI Ascend 2024 users conference, attendees discussed how centralized platforms and accessible data are enabling teams to make smarter decisions faster. By integrating disparate systems and creating unified dashboards tailored toward strategic objectives, operators can better understand performance metrics, resident behavior, and operational bottlenecks.

However, technology must be implemented thoughtfully. In an industry that centers around people and community, there’s an understandable concern that relying too much on software may erode human skills and reduce the quality of resident interactions. In the Navigating Challenges in the Apartment Industry report, interviewees emphasized the importance of balancing automation with a personal touch—especially when unexpected problems occur.

Challenges of centralization

While centralization offers clear benefits, it’s not without hurdles. Common challenges include:

• Implementation friction: Poorly executed tech rollouts can disrupt operations and frustrate staff. Clear planning and resident communication are essential.
• Training gaps and change management: Untrained staff may misuse tools or fail to adopt new systems, undermining efficiency gains.
• Loss of human connection: Centralized models risk depersonalizing resident interactions, which can impact satisfaction and retention.
• Regulatory and market risks: Operators face external pressures like rent control, insurance costs, and regulatory uncertainty, which can limit profitability even as centralization improves internal efficiency.

To tackle these issues, 22% of operators are planning to invest in upgraded tech platforms, 21% are improving communication between centralized and onsite teams, and 19% are reworking their organizational structures. These actions show a clear move toward scalable, integrated operations that can handle internal and external disruptions. As workforce expectations evolve, a company’s success in implementing centralized strategies will shape its future in the multifamily housing industry.

The benefits: Why centralization is worth the effort

Despite the challenges, centralization is proving to be a critical lever for success. Multifamily operators are using it to:

• Address profitability concerns: With widespread industry concern around revenue and expenses, 19% of survey respondents hope to improve operational efficiency through centralization and automation.
• Enhance resident services: Centralized communication hubs and AI tools are improving responsiveness and convenience for residents.
• Build scalable operations: Integrated platforms and redesigned organizational structures are helping teams adapt to hybrid workforces and demographic shifts.

Navigating the path forward: Practical advice

To successfully centralize operations, multifamily professionals should:

1. Start with strategy: Define clear goals for centralization and align them with resident needs and business objectives.
2. Invest in training: Equip staff with the skills to use new tools effectively and maintain high-quality service.
3. Maintain human touchpoints: Use technology to enhance—not replace—personal interactions with residents. According to an NAA article by Dom Beveridge, centralization can free up site staff for higher value work.
4. Monitor and adapt: Regularly assess the impact of centralization and be ready to pivot based on feedback and performance data.
5. Plan for external risks: Stay informed about regulatory changes and market trends that could affect your revenue strategy.

Centralization is not just a trend—it’s a strategic imperative. By embracing technology, planning thoughtfully, and keeping residents at the center of every decision, multifamily organizations can turn centralization into a powerful engine for growth and resilience.

To learn more about how the multifamily industry is adapting to centralization and other challenges, read the full report: Navigating Challenges in the Apartment Industry