By Paul Bergeron
After Moderna and Pfizer announced the results of a large-scale clinical trial showing a success rate as high as 94% for a COVID-19 vaccine, experts in the multi-family industry began to consider what the management will look like real estate when the pandemic threat finally subsides. .
What is clear is that the virtual rental technology that has been developed and implemented to help the apartment industry face the toughest challenges of 2020 will continue to play a vital role as the country will come out the other side – and new research supports it.
Recent survey of AppFolio tenants showed that 56% of tenants who signed a new lease during the pandemic saw the unit virtually or both virtually and in person, and nearly 80% of those tenants said they were satisfied with the virtual presentation.
Unlike March – when the apartment industry had to kick in to adapt to national home housing policies – operators can now envision a new normal and respond to changing tenant trends affecting location, square footage, rent, social commitment and convenience.
The preference and acceptance of work-from-home policies in many businesses has redefined “home” as tenants reinvent work-life balance. Nationwide data has shown a growing tendency for people to move from urban areas to suburbs – especially among renters.
The same AppFolio tenant survey found that 60% of 1,000 U.S. tenants surveyed agreed that the pandemic had changed their preferences about where to live. Among this group, when asked to check one of the options offered by the survey, the top reasons for moving or wanting to move included:
- Desire for a location / less populated region (44%)
- Change of scenery (41%)
- Being closer to family (25%)
- To continue working remotely and no longer need to travel (21%)
Industry leaders present their case
Last year was not easy, but many believe things will get better in 2021. Donald Davidoff, President of D2 Demand Solutions, says, “Call me an optimist about this recovery, but I ‘ve always believed that human nature is so that we want to come together, we want to be “close to the action” and we want to travel. It’s just health and safety issues that keep me and others from doing many of these things. As soon as this feels safe, people will want to be active again… In fact, there may even be pent-up demand that will rush to the fore.
It is estimated that the vaccine will be available to any American who wants it by April. However, even once a vaccine is available, the change can take some time. “If the vaccine is first distributed to at-risk communities such as nursing homes and healthcare professionals in 2020 and then to the general public in the first trimester, we don’t expect much change until the second trimester,” says Elaine De Lude, Vice-president of LIVEbe communities.
The bond between where residents work and live has loosened due to remote working and the pandemic. Stacy Holden, Senior Industry Director and Director at AppFolio, says: “Many young families living in cities were already considering moving to the suburbs in the coming years, but now with the pandemic their plans have accelerated.
In terms of what these cities will look like after the pandemic subsides, it remains to be seen, but Holden predicts it may take some time for them to return to what they used to be: “While these young families are moving in it takes time for high density cities to look like they are today. Emerging secondary cities may be able to retain people who have moved there “temporarily” due to COVID and make them permanent residents. As a result, these secondary cities could become more dynamic and popular places to live. “
The virtual world is here to stay
The apartment industry boasts of rapid technological advancements that it has incorporated out of necessity over the past year.
Victoria Cowart, CPM and Vice President of Adalease Property Management says:
“A vaccine puts us on a ‘new normal path’. And while this phrase has become more than a little worn out, it is too relevant not to be used. By “normal” I mean routine – going back to a more cohesive course and model of operation. And by “new” I mean new technologies and skills that the industry has acquired and is deploying. “
The much-acclaimed contactless technological advancements that really took off in March prove that they will remain a crucial tool for on-site rental practices. While there are still some prospects who prefer to meet in person or in part on self-guided tours, it’s good to have virtual options.
Marcie Williams, CAPS, CPM and President of RKW Residential, says: “Some of the protocols and procedures put in place for the pandemic will likely make sense to continue, such as self-guided tours and work-from-home options. for members of the company team. “
According to the AppFolio survey, 40% of renters said they wanted the ability to view units virtually and in person after the pandemic, and 13% said they preferred to view units virtually. Based on these results, it’s likely that prospects and property management teams will continue to want to use virtual tools in their home search.
Prepare to meet the demand of changing tenant priorities
De Lude says that soon people will be more comfortable moving and will likely seek shorter-term leases, so they can be flexible about new job opportunities and new locations.
These tenants, however, continue to want a more transparent process when applying for an apartment, the AppFolio survey showed. Only 47% of renters said the application process was “easy”, meaning more than half found it difficult. And when asked what tasks they would prefer to do with a mobile device or online, 46% said they would like to apply for a rental and 48% said they would like to sign or renew their lease.
“The desire for more flexibility – without extraordinary costs – will be important for many tenants, as they continue to work remotely and have a desire to see and even live in other parts of our country,” says De Lude.
“Look for increased pent-up demand in new leases; and in other cases – if we haven’t treated our residents very well or if they have felt a negative impact from our teams being far away during COVID – they will start moving. This is especially true in the A + product class. “
By the fall, many were already looking for more space at less rent, taking advantage of rent concessions, or even moving into their apartment building just to improve their living spaces. Apartments.com’s PRA agency reported in October that 42% of tenants had delayed their move due to COVID-19 and are now ready to look for accommodation elsewhere.
The claustrophobia that many tenants have faced since April is now prompting them to focus on large open spaces. Apartment marketers prioritize this convenience in their messaging.
“Suburban properties – especially those with limited contact areas (like open exterior stairwells) will continue to be more popular,” says Lisa Trosien, apartment consultant. “Balconies, pantries, home work spaces, etc., will continue to be able to charge a premium over spaces that do not have this type of amenity. We are already seeing changes in multi-family design and construction due to COVID-19 in multi-family homes. I am sure it will continue.
With this shift in lifestyle preferences, the industry can now take advantage of the motivated migration of employees – those who know they can live where they want to, as their companies realize they can perform their core functions at from remote locations.
Cowart says the most requested areas of the country remain to be seen:
“Will migrant workers be looking to return to the crowded nightlife they love in city life and grab a few discount rents in struggling markets? Or maybe they’ve gotten used to comfortably living “cold” at a distance and prefer it to stay that way. “
Single-family home operators – as they have done throughout the pandemic – are expected to continue to thrive. According to the Wall Street newspaper and real estate analytics firm Green Street, asking rents for available properties owned by large home rental companies, jumped 7.5% in October, the biggest month-to-month increase ‘other since 2014.
Escaping cramped living conditions in apartments in favor of homes with more living space and outdoor space has its appeal, and therefore will continue to be a competitive market. “Competition will intensify between multi-family and single-family rentals; tenants have built an aversion to density and want more space, ”notes Halsey.
Even with a COVID-19 vaccine on the horizon, technological advancements will remain at the forefront of the recovery for the real estate industry for years to come. As tenants look to new markets and search for housing online, it is clear that they will continue to want access to virtual tools. Property managers can make the most of any potential demand and fill vacancies faster in the future if they implement the latest technology now.
Paul Bergeron is a freelance writer who has covered the apartment industry for almost 20 years, including for the National Apartment Association.