The Future of Property Management Post-COVID
After Moderna and Pfizer announced results from a large-scale clinical test showing as high as a 94% success rate for a COVID-19 vaccine, experts in the multifamily industry have begun to consider what property management will look like when the pandemic threat eventually subsides.
What’s clear is that the virtual leasing technology that was developed and implemented to help the apartment industry withstand 2020’s toughest challenges will continue to play a critical role as the country comes out on the other side -- and new research supports this.
AppFolio’s recent renter survey showed that 56% of renters who signed a new lease during the pandemic viewed the unit virtually or both virtually and in-person, and almost 80% of those renters said they were satisfied with the virtual showing.
Unlike in March -- when the apartment industry had to turn on a dime to adjust to nationwide shelter-at-home policies – operators can now envision a new normal and respond to shifting renter trends affecting location, square footage, rent, social engagement, and convenience.
The preference and acceptance of work-from-home policies in many businesses has redefined “home” as renters are reimagining work-life balance. Data nationwide have shown a growing trend of people moving from urban locations to the suburbs -- particularly among renters.
The same AppFolio renter survey revealed that 60% of the 1,000 U.S. renters surveyed agreed that the pandemic has changed their preferences on where to live. Of that group, when asked to check any of the options the survey offered, their top reasons for moving or wanting to move included:
- Desire for a less populated location/region (44%)
- Change of scenery (41%)
- To be closer to family (25%)
- To continue working remotely and no longer need to commute (21%)
Industry Executives State their Case
This past year hasn’t been easy, but many feel things will eventually 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 such that we want to congregate, we want to be ‘near the action,’ and we want to travel. It’s been only health and safety issues that prevent me and others from doing many of these things. As soon as it feels safe, people will want to be active again … In fact, there may even be pent-up demand that will rush to the forefront.”
It’s estimated that the vaccine will be accessible to any American who wants it by April. However, even once a vaccine is available it may take some time to see change. “If the vaccine is first released to at-risk communities such as nursing homes and health care professionals in 2020, and then to the general public in Q1, we don’t anticipate much of a change until Q2,” says Elaine De Lude, Vice President of LIVEbe Communities.
The connection between where residents work and live has loosened as a result of remote work and the pandemic. Stacy Holden, Sr. Industry Principal and Director at AppFolio says, “Many young families living in cities were already thinking about moving to the suburbs in the coming years, however now with the pandemic, their plans have been accelerated.”
In terms of what these cities will look like after the pandemic subsides, it still remains to be seen, but Holden predicts it may take a while for them to return to how they were, “As these young families move to the suburbs, it may take a while for high-density cities to look like they are today. Up-and-coming, secondary cities may be able 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, popular places to live.”
The Virtual World is Here to Stay
The apartment industry has been boasting about the rapid technology advances it has integrated out of necessity over the past year.
Victoria Cowart, CPM and Vice President of Adalease Property Management says:
“A vaccine places us on a ‘new normal’ path. And while that phrase has become more than a bit hackneyed, it is too on-point not to use. By ‘normal,’ I mean routine -- getting back to a more consistent course and pattern of functioning. And by ‘new,’ I mean the new technologies and skills that the industry has taken on and is deploying.”
The much-applauded contactless, technological advances that really took off in March are proving they will remain a crucial tool for onsite leasing practices. While there will still be prospects who prefer to meet face-to-face or part in self-guided tours, it’s nice to have virtual options.
Marcie Williams, CAPS, CPM, and President of RKW Residential, says, “Some of the protocols and procedures that were put in place for the pandemic will probably make sense to continue, such as self-guided tours and work-from-home options for corporate team members.”
Based on the AppFolio survey, 40% of renters said they wanted to have the option to view units virtually and in-person post-pandemic, and 13% said they prefer to view units virtually. Based on these results, it’s likely that prospects and property management teams alike will continue to want to use virtual tools in their housing search.
Preparing to Meet the Demand of Renters’ Shifting Priorities
De Lude says soon people will become more comfortable with moving and will likely seek shorter-term leases, so they can be flexible about new job opportunities and locations.
These renters, however, continue to want a more seamless process when applying for an apartment, the AppFolio survey showed. Only 47% of renters said that the application process was “easy,” which means more than half found it difficult. And when asked what tasks they would prefer to carry out with a mobile device or online, 46% said they would want to apply for a rental and 48% said they would want to sign or renew their lease.
“The desire for more flexibility -- without extraordinary costs -- will be important to many renters as they continue to work remotely and have a desire to see and even live in other parts of our country,” De Lude says.
“Look for a pent-up demand-surge in new leases; and in other cases – if we haven’t treated our residents very well or they felt any negative impact from our teams being remote during COVID – they will start to move. This is especially true in the A+ product class.”
In the fall, many already were shopping around for more space at less rent, taking advantage of rent concessions or even moving within their building simply to upgrade their living spaces. Apartments.com’s agency PRA in October reported that 42% of renters had delayed their moves due to COVID-19 and are now ready to look elsewhere for housing.
The claustrophobia that many renters have faced since April has them now focusing on larger, open spaces. Apartment marketers are prioritizing such comfort in their messaging.
“Suburban properties -- especially those with limited contact areas (such as open exterior stairwells) will continue to be more popular,” apartment consultant Lisa Trosien says. “Balconies, pantries, work from home spaces, etc., will continue to be able to demand a premium over spaces that do not have that type of amenity. We are already seeing changes to multifamily design and construction due to COVID-19 in multifamily. I am sure this will continue.”
With this shift in living preferences, the industry can now leverage the motivated migration of the employed -- those spurred by knowing that they can live where they choose because their companies realize they can perform their essential functions from remote locations.
Cowart says the areas of the country to be in greatest demand remains to be seen:
“Will migratory employees seek to return to the congested nightlife they love in urban living and seize on some bargain rents in beaten down markets? Or, maybe they’ve become comfortably accustomed to living ‘chill’ from a distance and prefer keeping it that way.”
Single-family home operators – as they have throughout the pandemic -- should continue to thrive. According to the Wall Street Journal and real-estate analytics firm Green Street, asking rents for available properties owned by big home-rental firms jumped 7.5% in October, which was the biggest month-over-month increase since 2014.
Escaping cramped living conditions in apartments in favor of homes with more living and outdoor space has its allure, and as a result will continue to be a competitive market. “The competition will grow stronger between multifamily and single-family rentals; renters have built an aversion to density and want more space,” notes Halsey.
Even with a COVID-19 vaccine on the horizon, advancing technology will remain at the forefront of recovery for the real estate industry for years to come. As renters look to new markets and conduct their housing search online, it’s clear they will continue to want to have 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.
Editor’s Note: The perspectives expressed in this article are those of the author and individuals interviewed. For resources and information to support your business as you respond and adapt to the constantly changing pandemic situation, please see our Covid-19 resource center.