It may be the new year, but there's still plenty of uncertainty about what lies ahead for the multifamily industry in 2021.
The development and distribution of Coronavirus vaccines provide some promise that life could return to normal sometime later this year. However, with the pandemic still raging within the United States, necessary progress with the economy and employment has remained slow.
While the industry has, thankfully, been less affected financially than others as a result of the events of 2020, challenges await. In this blog, we'll look at some of the questions facing property owners, managers and apartment marketers this year, and provide actionable solutions for how to proceed going forward.
What exactly is the aftermath of COVID for apartment communities?
The biggest unknown in the post-pandemic era of 2021 is what happens when renter relief efforts end. With Congress' latest passing of a $900 billion stimulus relief package in late December 2020, unemployment benefits will include $300 weekly through March 31, 2021. Additionally, the Center for Disease Control's recommended evictions moratorium was extended to January 31, 2021.
While it seems these deadlines push the multifamily industry towards the edge of a cliff—one where they may be forced to tell tenants to move out, resulting in significant losses in both their occupancy and revenue—NMHC's Rent Payment Tracker shows that monthly rental payments have remained steady.
That being said, property managers should still remain on guard for potential vacancy crises. There are varying indicators hinting towards a busier period of migration. Many renters who had delayed their moves in 2020 may now be ready to go. Some who were hit financially harder than others could opt for less expensive housing. Then there are the tenants who moved to an apartment for its proximity to their office who are now working remotely—they're certainly facing a dilemma of deciding whether or not it's worth keeping their current lease.
Actionable: Look at future occupancy and be nimble with your rent specials.
Will your community experience an impending period of multiple lease expirations? What preparations are you making for the inevitable turnover that will occur during your busy season? These are things your teams should be thinking about now. As we wait for normalcy post-pandemic, one sustainable approach to maintaining a strong occupancy is to continue leveraging your rent specials or concessions, and to include both in your marketing plan.
How should apartment communities react to the urban exodus?
Over the course of 2020, a massive group of renters left major cities, either for less expensive apartments in suburban areas or because they simply didn't have the same living experience they had prior to the pandemic.
Major cities, particularly downtown areas, were appealing places to rent because of their location. However, quarantine restrictions prevented renters from being able to socialize at the restaurants, clubs, arenas, and stores nearby. They also affected those tenants who chose to live in the metro for work.
When renters are unable to enjoy local features and attractions or have to work remotely, what's the point of paying expensive rental rates typical of downtown Class A properties? It's understandable that many either couldn't sustain that cost of living or felt it was no longer necessary to pay for a lifestyle they no longer had.
So where do these communities go from here?
Actionable: Adapt to your tenants' new needs. Change part of your clubhouse into a work from home space. Build an in-house coffee shop. Whatever change you decide on, have a plan to market it.
Owners in this sector need to be creative and find new ways their properties could attract new residents and retain current ones.
One smart idea may be developing a shared work from home space. That could circumvent the tide of residents who had planned on leaving because of this exact issue. Maybe you could add a coffee shop or bar area in your clubhouse that allows tenants to still have a taste of their desired lifestyle prior to the pandemic. It also wouldn't hurt to take advantage of new technology trends, like adding the Peloton or Tonal to the gym. Whatever you choose, be sure to update your marketing plan.
At what point do you consider selling your apartments?
Here's what Mike Aiken of Fogelman Properties said in an Multi-Housing News article:
"The good news is that we’re looking at much less volatility in the upcoming year...we’re approaching a more stabilized position as local economies reopen and the potential vaccine(s) accelerates a return to
“somewhat normalcy” by mid- to late 2021. That stability will bring with it
increased job security and more transaction activity."
The CRBE Group is also promising a strong turnaround in the multifamily market. They mention that the challenges of 2020 didn't affect the pricing of properties, and that many of the investors who opted to wait out the previous year will be more active as things improve. The window of opportunity for owners looking to sell is here.
Actionable: Sell while the market is strong.
Interest rates are really low at this moment, so the value of apartments could only go up. If selling is the best for you or your property, it may be time to start the process and take advantage of the reinvigorated market.
When do you allow full access to your community's gym, pool, or clubhouse?
None of us predicted that we'd still be dealing with the Coronavirus outbreak nearly a year since it first began affecting the U.S. Many of the procedural changes apartment communities had to make at the onset of the pandemic are still being enforced—especially the limitation on the number of persons who are able to gather in a shared space.
So the question still remains as to how to proceed with allowing tenants back into your community's gym, pool, clubhouse or other shared amenities while this health crisis continues.
Actionable: Download the "RentVision Guide on How to Handle Your Apartment Marketing During a Health Crisis" ebook.
First and foremost, we strongly recommend properties adhere to the local directed health measures regarding gatherings of this nature. Access should only be applied when it falls under those recommendations, and we've seen apartment communities implement scheduling and other tactics to allow residents to still take advantage of these amenities.
Full access simply isn't possible until those quarantine restrictions subside. In the meantime, communities should continue to let tenants use amenities in a safe, socially-distant matter. As we say in our ebook: sanitize, sanitize, sanitize. Make sure you're promoting a healthy atmosphere when it comes to shared group spaces, and that you have enough cleaning resources necessary to maintain it.