The potential for an economic downturn has not dampened rental housing industry executives’ spirit or outlook. Part three explores insights related to technology and legislation and regulation, as well as provides a look forward to 2023.
Technologies ebb and flow—think cassette tapes to CDs to streaming services or Myspace to Facebook—with the times, which is exactly what the entire industry has done during the pandemic but not entirely as a result of the pandemic.
Some tech and other items like self-guided tours were around before COVID-19, but it was the pandemic that acted as a catalyst for many to implement this potentially new style of leasing opportunity for prospective residents. Bonnie Smetzer, CPM, HCCP, Executive Vice President with Asset Living, says they implemented self-guided tours during the pandemic, but they have started to fade, yet virtual tours continue to be popular.
Curt Knabe, CFO, Realty Center Management, Inc., also says they adopted self-guided tours, but they are all but eliminated. “I do feel that the human touch has taken over in the leasing world.… There seems to be a lot of technology really driving toward that space.… One of the technologies that has caught my eye is in the area of fraud prevention. Our site teams continue to see fake IDs, fake paystubs, etc., but there has been a lot of new technology to assist the sites in preventing that type of fraud.”
Amy Weissberger, Senior Vice President of Corporate Strategy with Morgan Properties, has also found technology useful when detecting fraud. “Identity verification and income verification products also moved to the forefront during the pandemic, as fraudulent employment documents seemed to increase,” she says. “The technology to check identification documents and income is continuing to improve and becoming an important added tool to have as part of the application screening process.”
Companies are also becoming more efficient because of these new technologies or new developments in technology. Weissberger says customer relationship management (CRM) software has helped onsite staff as well as user experience, “improving the journey for our applicants and residents.”
The Life Properties rolled out self-guided tours as well, but as the pandemic eased, their use declined. CRM use has given a “level of transparency that helps us make decisions quickly,” says Jamin Harkness, President, The Life Properties. Prior to CRM software, they would have to manually follow-up and track advertising performance.
Venterra partnered with a smart home automation provider to “implement a high quality, personal, contact-free apartment tour experience,” says John Foresi, CEO of Venterra Realty. “Post-COVID, this remains to be a benefit to our customers, as they are able to easily arrive at a community, scan a QR code, select the apartment type they want to tour and take the tour independent of the office staff should they choose.”
Alliance Residential President/COO Jay Hiemenz also says COVID technology will stay to some degree, allowing residents to take advantage of work-from-home opportunities—a major driver in some of the changes witnessed in multifamily. “We also believe that the remote work/work from home, although not an absolute necessity as it was during COVID, still has a permanent place for the U.S. workforce, and thus our properties have to be fully implemented with appropriate connectivity allowing work at home productivity.”
Legislation and Regulation
“Providing housing is more important now than ever before, but I am also concerned about increased regulation, which adds costs to operations at a time when costs have been rapidly increasing,” says Smetzer, who is also worried if the U.S. Department of Housing and Urban Development decides to remove the ability to perform criminal screenings. Rental housing providers and management firms do their best to protect residents, so removing one of those protections could impact operations.
“Increased regulation continues to slow the development pipeline and adds to increased cost of development and operating expenses,” says Smetzer, who forecasts this will continue in 2023. “We are fighting rent control in some markets that will negatively impact operations and the ability to finance new construction.”
Harkness sees promise in the Broadband Equity, Access, and Deployment (BEAD) Program, a more than $42 billion internet for all program, “which will enable the provision of high-speed internet to low-income households on a state-by-state basis via targeted investments in critical infrastructure and key communities,” says Harkness. “While the mechanics of each state’s particular administration are still somewhat opaque, we are extremely optimistic about the benefits of this program for our residents.”
He adds: “The government has proven that it is very supportive of mission-driven affordable housing, which is consistent with our asset acquisition strategy. We hope to continue to see bipartisan support of more initiatives that incentivize the creation and preservation of affordable housing.”
LUMA Residential President Ian Mattingly sees much of the same going forward into 2023 surrounding government regulation and legislation. This includes wrestling with rent control, the Housing Choice Voucher Program (Section 8) and free legal counsel for renters. “All of these often-well-intended policies have various unintended consequences that ultimately serve to add to the already enormous government-imposed costs associated with providing rental housing.”
Some companies have been able to weather the pandemic better than others, allowing for new business opportunities, such has entering a new market or sector or establishing a new business model.
Smetzer says they started a build-to-rent division in 2021 and have seen robust growth as has Asset Living’s new construction/lease-up portfolio.
One positive Weissberger mentions is the growth of environmental, social and governance (ESG) programs. “There are several new product offerings and services that came to market over the last two years, and they are being embraced by owners, employees and residents. By having a focus on ESG, company cultures will continue to get better, and our communities will become an even better place for our residents to call home.”
Despite some of the potential headwinds in 2023, there is much to be excited for in the rental housing industry, this includes business expansion.
Goss says HHHunt Apartment Living purchased five new communities, four in new markets in the October/November time frame. “This has been an exciting process for us as acquisitions are somewhat new to our organization. It has been the fun challenge onboarding/training new people, creating new budgets, at the same time as we go through our normal budget process.” History can repeat itself, but it is also one of the best ways to learn for the future. Harkness says his experiences during the Great Recession nearly 15 years ago—cutting rents and expenses—taught him how to run a company with a lighter staff.
Since that time, the economy had mostly improved until the pandemic and a potential recession this year, with advancements in technologies and other new factors. He says their tech stack continues to grow yearly with the tendency to cut back when there are higher interest rates, but he asks, “Moving forward, could we pivot—as we mastered during COVID—to leverage technology and increase the impact of each team member?”
Weissberger did not realize how easy it would be to work from home and connect with co-workers. In turn, residents were also working more from home and will continue to do so. She says they needed to find ways to offer certain products and services to keep residents engaged and wanting to live in the communities.
“As part of the innovation team in our organization, we specifically look for new products that set us apart from the property next door and enhance residents’ everyday living experiences.”
Michael Miller is Managing Editor for NAA.