HOT & RELEVANT TOPICS
Soothing Fears About Pathogens Isn’t Insurmountable
As the multifamily industry prepares to move forward from the Covid-19 pandemic, it will be catering to the requirements of safety-minded residents. The biggest demand renters are making is for advanced HVAC systems capable of neutralizing airborne pathogens. Fortunately for owners, that technology is readily available and the upgrade process won’t derail operating budgets. In most cases, it doesn’t require replacing ductwork, but simply installing filters that treat circulating air and kill pathogens before pushing that air out to apartment homes. The competition for occupancy has driven apartment communities to lower rates and offer move-in concessions. But measures that enhance air quality and limit health risks could be just as attractive.
Stack Your Tech Strategically
Pandemic-related restrictions have forced the multifamily industry to accelerate its implementation of tech. But adopting a tech provider shouldn’t be done hastily, even when the current industry landscape presents a glaring need. Adopting the wrong PropTech can be counterproductive, so apartment operators should be exceedingly thorough when vetting any new provider. Operators should research how well the provider is able to pivot, explore its remote-assistance capabilities, vet its prowess with connective technologies and perform a new-school cost-benefit analysis. The latter analyzes not only if the provider can be a revenue generator, but also whether it can mitigate short-term losses.
Now Is the Time to Leverage ESG Incentive Programs
Residential energy use has increased by up to 20% this year, due to those working remotely or at home and out of work. As state and local governments shift to 100% clean energy policies, they’re also requiring multifamily residential to reduce its reliance on fossil fuels. Now is the time for multifamily owners to ramp up their energy efficiency upgrades. Well-coordinated transitions can yield savings of up to 60%, with incentives covering up to 75% of the up-front cost. Stack and combine incentive programs to maximize savings. Allow ample time for project completion, but also for comprehensive property analysis.
IN THE NEWS
Performance Holding Steady as Summer Comes to an End
Multifamily experienced a massive 75% drop in traffic at the outset of the pandemic, but has spent the summer steadily recovering. While the industry hasn’t entirely regained its 2019 form, the week ending Sept. 6 saw an 8.3% year-over-year drop in traffic—very reasonable considering the circumstances. Net-effective rent ($1,649) followed suit at an 8.4% YoY drop, although some coastal markets have been more affected. Additionally, the national occupancy rate stood at 94.11% percent entering Labor Day, which symbolized a drop of 50 basis points from the previous year. On a national basis, most multifamily metrics have remained steady since midsummer.
Developers Offer Generous Concessions to Fill New Buildings
To attract renters to their properties amid the pandemic, multifamily owners are extending generous concessions. More than 30% of apartment listings on Zillow featured concessions in July, including offers for periods of free rent, reduced or waived deposits and gift cards. New communities extended concessions to include multiple months of free rent, as well as up to $1,500 for moving expenses and free internet. Still, new properties have struggled with occupancy, particularly in urban areas. Properties that opened in the second quarter of 2020 were still 71% vacant by the end of June. However, the overall vacancy rate for the industry has only dropped by .2% since last year.
Sustainability Data Aids Multifamily’s Quest for Bulk Removal
Although tech tools dominate the industry’s pursuit of prospects, curb appeal remains a distinguishing factor in some cases. If that curb is littered with junk, it can potentially prevent leases. Bulk-item junk removal remains an issue for many communities, with a lack of viable donation outlets, reuse consumers and affordable removal services. This has prodded property management companies to seek budget-friendly, conscientious junk removal to meet diversion mandates. The idea is to remove bulk items in a timely manner with a simplified pricing structure. Some forward-thinking sustainability services are using BI analytics to make this happen.