THE MULTI-FAMILY INDUSTRY HAS CONTINUED TO WEATHER THE ECONOMIC DOWNTURN AND THE NEW NORMAL
By Sean Burton
Despite concerns that rent payments would decline significantly, the multi-family industry has remained extremely resilient throughout the COVID-19 crisis and weathered the associated economic turmoil far better than many other property types. There has been much less disruption in the multi-family space than in other sectors, like hospitality and retail. Ultimately, people need four walls and a roof over their heads, and notwithstanding the current crisis, there is still a severe supply shortage of housing in many areas of the country that will continue to drive long-term demand.
National Multifamily Housing Council (NMHC) reported 94.6% rent collections in April, 95.1% in May, and 80.8% as of June 6. At Cityview’s Class A properties, which are primarily in West Coast urban markets, we saw April and May rent collections at over 96% and June currently tracking slightly higher than May as of the beginning of the month. These numbers are remarkably strong, perhaps aided by the stimulus, enhanced unemployment benefits, and the ability for many tenants to work from home. But that doesn’t mean it’s business as usual, as there are key considerations to adapting to our new normal.
In the era of distancing, many potential residents prefer to tour properties from the safety of their homes. While we had already started implementing virtual leasing at many of our properties, the pandemic spurred a full rollout that allowed potential tenants to view the entire property, including amenities, model units, and units they may be interested in leasing based on floorplan and price point, all guided by a leasing agent. Our property management staff has given tours using Facebook Live, Instagram, and video conferencing, among other technologies, allowing them to tailor the experience to each person’s needs and preferences.
We have been pleasantly surprised how close the experience of virtual leasing is to the real thing. At Cityview, we have closed about 250 new virtual leases over the past couple of months, with a success rate at some properties higher than our in-person tours. Currently, we are seeing more interest in one- and two-bedrooms over studios, as people increasingly see the value of more spacious living environments, but it remains to be seen if this will continue as life transitions to our new normal. As the country reopens, virtual leasing may become less of a necessity, but it will continue to be a valuable offering for those who can’t be there in person or simply find it more convenient to tour the property virtually.
Social Distancing and Cleanliness
Ramping up cleaning procedures and making changes in common spaces to better accommodate distancing is important to ensure residents feel safe. Spacing all seating and lounge chairs with tape markers on the ground at least six feet apart helps prevent residents from congregating. Allowing reservations for amenities such as the pool or gym via a resident portal is another way to ensure common spaces can stay open without being overcrowded. Property management may consider spending less time in the office and more time walking around to ensure furniture remains far enough apart and provide a friendly reminder about distancing to residents if needed. When distancing isn’t practical, virtual events can also help bring residents together.
For basic maintenance requests, it’s helpful to give residents the option of having personnel take care of the request in person, as usual, or be walked through how to fix it themselves. This virtual do-it-yourself option has become extremely popular as residents aim to avoid people entering their homes.
Extensive outdoor space, such as in-unit balconies, rooftop decks, meditation areas, and pools, are proving invaluable for residents seeking more space in the near term. We’re also assessing if more permanent changes are needed, such as touchless features or HEPA filters in indoor areas. Low-rise properties will likely continue to be more desirable than high rises, as residents prefer open-air hallways and stairwells to long elevator rides with others.
The Future of Multi-family
While it’s undoubtedly that multi-family has risen to the occasion of adapting to our new normal, the question remains if and how COVID-19 will impact renters’ preferences over the next 3-5 years, when the projects that are breaking ground now will complete. Will people still desire more space and distance, or will an effective vaccine put that in the rearview mirror? We’re continuing to look at the data, speak with architects and other industry experts and keep a pulse on what’s ahead to inform these decisions, while making changes to ensure our residents feel safe and protected at our existing multi-family projects.
Sean Burton is CEO of Cityview, a Los Angeles-based multi-family investment management and development firm. For more information, visit cityview.com.