Costs are climbing faster than many operators expected, and teams are actively trying to figure out how to keep up without creating new problems in the process.
The Federal Reserve Bank of Minneapolis found that more than half of all operating expense (OpEx) inflation since 2020 ties back to property insurance, with premiums roughly doubling between 2021 and 2024. At the same time, rent growth has slowed in many markets, so passing those costs on to residents just isn’t as simple as it used to be.
For years, the playbook was simple: raise rents when possible, cut where needed, and delay anything nonessential. That approach held up when demand stayed strong and residents had fewer alternatives. But that’s not the environment operators are working in today, and leading with cuts usually creates bigger issues than it solves.
The problem with cutting your way to profitability
When budget cuts start to show up in the resident experience, renewals drop. That leads to higher turnover, and the cost of turning a unit quickly erases whatever savings you thought you were creating.
According to the National Apartment Association, over half of property management firms report average turn costs between $1,500 and $3,500 per unit, with 20% coming in even higher. Across a portfolio, that adds up fast.
Operators see it play out in real time. You pull back in one area, something else slips, and now you’re spending more to fix it than you saved in the first place.
That’s why the conversation is shifting from what to cut to what’s actually worth keeping. But you can’t answer that without data.
Understanding what performs
Operators need to know which amenities are used consistently, what’s actually reducing staff workload, and where time and money are going with little return. The good news is that data already exists in resident surveys, usage patterns and service logs.
Regularly reviewing that data helps teams move away from assumptions that may not hold up anymore. Something that worked two lease cycles ago might not make sense today.
It also changes how you think about underused spaces. An empty business center doesn’t necessarily mean residents don’t need it. It might just mean it no longer fits how they live or work.
At the same time, some amenities show steady, repeat usage because they’ve become part of daily life. Pet amenities and package lockers are good examples. Residents rely on them and have built routines around them.
Before making changes, operators need to understand what’s driving both outcomes. Sometimes the right move is to improve or reposition. Sometimes it’s to remove something entirely. But those decisions should come from real behavior, not gut instinct.
Holding amenities and technology to a higher standard
Operators have always applied clear return on investment (ROI) standards to utilities and capital decisions. Now, amenities and technology are getting that same level of scrutiny.
Some investments are easy to justify. Smart locks reduce service calls and eliminate key management. Package lockers solve a daily pain point and save staff time. You see the value almost immediately.
But not everything holds up the same way. Adding technology without a clear purpose is how properties end up with expensive features no one really uses.
Fitness spaces tell that story well. A basic equipment room was enough a decade ago. Now, residents are looking for spaces that support how they actually live. Group fitness, wellness-focused areas and flexible layouts are now the expectation. The need didn’t disappear. It evolved.
Operators who catch those shifts early can adjust before a space stops making sense for the community.
Retention as an operating strategy
When turning a unit costs thousands of dollars, retention becomes a financial lever, not just a leasing metric.
Every renewal has a direct impact on net operating income (NOI). On a 200-unit property, a five-point lift in retention can translate into tens of thousands of dollars in avoided turnover costs. That’s real impact on the bottom line.
Operators are starting to act on that.
Some portfolios are pushing turnover to historic lows, while some are holding steady in a tougher environment. What matters isn’t the exact number. It’s the approach behind it.
The teams getting results are protecting the experiences residents rely on, keeping operations consistent and avoiding cuts that create more problems later.
Market conditions are helping, too, since homeownership is out of reach for many renters, and uncertainty is keeping people in place longer. But that won’t last forever.
Operators who use this window to build stronger systems and retention habits will be in a much better position when conditions shift again.
The operating model that holds up
The pressure on margins isn’t going away. Since 2021, expenses have been rising at a pace the industry hasn’t had to manage in a long time.
But these conditions also create an opportunity to be more intentional about how the business runs.
The strongest teams are looking closely at how every part of the operation performs. They’re using data to understand what drives satisfaction and renewals, treating retention as a core lever, and applying the same discipline to amenities and services as they would to any other investment.
At the end of the day, every operating dollar needs to earn its place. That’s what cost discipline looks like in practice.
Jeff Lail is the CEO of WithMe, Inc.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners. To contact the editor responsible for this piece: zeb@hwmedia.com.
