News & Research Listing
The National Apartment Association is taking legal action to recover damages housing providers suffered under the CDC’s eviction moratorium and ensure that similar measures can never again be enacted.
The National Apartment Association (NAA) on July 27 filed a lawsuit in the U.S. Court of Federal Claims to recover damages on behalf of rental housing providers that have suffered severe economic losses under the U.S. Centers for Disease Control and Prevention’s (CDC) overreaching federal eviction moratorium.
As NAA members and the broader industry understand all too well, the CDC’s prolonged order directly harms those who provide critically needed rental homes, jeopardizes the long-term viability of housing infrastructure and sets a dangerous precedent for future disaster-response measures. NAA is the first to take legal action seeking compensation for the CDC’s policy and to ensure that similar “emergency measures” cannot be enacted again.
The suit, NAA et al. v. The United States of America, is open to all rental housing providers who have been damaged by and are operating in a state or locality under the federal eviction moratorium. It argues that the CDC order has curbed several rights under the U.S. Constitution including: The right to access the courts, the freedom to contract with others absent government interference, the right to demand compensation when property is taken by government action and the limits of federal government power. NAA is confident that the CDC will be found to have acted illegally based on court rulings to date, including the most recent decision from the Sixth Circuit Court of Appeals affirming that the CDC’s order was unlawful.
Apartment owners and operators have continued good-faith operations throughout the public health and economic crises of the COVID-19 pandemic and are now left to shoulder $26.6 billion* in debt not covered by federal rental assistance. As a low-margin industry where just 10 cents of each rental dollar is considered “profit,” this debt is unsustainable and could devastate countless small businesses while simultaneously damaging housing affordability. Though NAA is proud of the unprecedented adaptability and flexibility of our members and the broader industry, we firmly believe that it is time to make rental housing providers and their residents whole again.
Relief efforts to date have fallen short of fully supporting the rental housing industry and its residents. While the federal government has allocated roughly $47 billion in federal rent relief, it took more than nine months for Congress to do so. Further, that amount also does not cover the full and continuously growing amount of rent debt – current estimates indicate an additional $26.6 billion on top of Congress’ $47 billion rental assistance funding. The government’s prolonged inaction, paired with a sluggish rollout and the CDC eviction moratorium, has only allowed unfunded rent debt to continue to balloon.
Since the onset of the pandemic, NAA has aggressively advocated to protect the interests of the rental housing industry. We have called out the dangers and short-sightedness of eviction moratoria and asked for its sunset to both the 116th and 117th Congresses, in meetings with both the recent and current White House administrations and across all levels of media. NAA was among the first to take legal action challenging the CDC’s authority last September by joining the National Civil Liberties Alliance lawsuit, Richard Lee Brown, et al. v. Secretary Alex Azar, et al.
The COVID-19 pandemic was devastating, and if we do not act, the housing affordability crisis may grow into a catastrophe where the government could invoke more “emergency” remedies. With the meter on rent debt still running, political will waning and Congress moving past COVID-relief measures, NAA is putting up the greatest fight yet and asking the courts for two things: Fair compensation for damages suffered under the unlawful CDC order and an assurance that the federal government can never do this again.
NAA is proud to take action for our members and work to stabilize the industry. The rental housing industry cannot be held solely responsible for an unfunded rent debt while the federal government trades one crisis for another. Ultimately, making housing providers and their residents whole again will help secure the long-term health of the rental housing industry and ensures households across the income spectrum have continued access to rental housing.
*$57.3 billion in rent debt at the end of 2020 (Urban Institute) + $8 billion in Q1 2021 (MBA) + estimated $8 billion in Q2 2021 (MBA, Q2 numbers expected soon) - just under $47 billion in allocated rental assistance = $26.6 billion in unfunded rent debt (and climbing)
ARLINGTON, VA | May 6, 2021
Four associations who serve the rental housing industry, with funding from leading property management software provider Yardi Systems (Yardi), have completed their COVID-19 Rental Housing Support Initiative designed to bolster the industry as it continues to face the impacts of the pandemic. The Institute of Real Estate Management (IREM), National Apartment Association (NAA), National Multifamily Housing Council (NMHC) and National Association of Residential Property Managers (NARPM) joined together on this collaboration at a pivotal time for the industry.
The initiative features four key components, each designed to provide solutions for the challenges the industry faces:
- A mental health resource library designed to help the industry cope with the effects of mental health through the pandemic.
- A liability resource library aimed to keep industry owners and operators updated on new guidelines and ongoing legislation.
- An education to legislation site for informing decision-makers on how their choices affect the industry.
- Two comprehensive industry facts toolkits to provide rental housing industry constituents with some positive information about the industry they can share with the general public.
“Yardi is committed to a healthy and thriving rental housing industry. We have been honored to partner with four outstanding organizations to provide needed resources for a challenging time. Our hats are off to NAA, NMHC, IREM and NARPM for the work they have done on behalf of their members,” said Esther Bonardi, Vice President of Yardi.
“At IREM, we know that the effects of the pandemic have taken a toll on individuals and businesses, which is why these resources are so important,” says Chip Watts, CPM®, CCIM, C2EX, AWHD®, 2021 IREM President. “We are grateful to our partners at Yardi and these industry associations for their commitment to positioning residential real estate for long-term growth. These shared resources will help us all navigate the personal, legislative, operational, and economic issues facing us today.”
“NAA is proud of the incredible work this collaboration has provided thanks to the generous support of our friends at Yardi,” said Robert Pinnegar, President & CEO of the National Apartment Association. “These timely resources will supply housing providers across the country with the tools, knowledge and support they need to continue to weather the pandemic and thrive beyond it.”
“This collaborative project, generously supported by Yardi, has been a testament to the commitment of the multifamily industry to supporting our members, residents and employees,” said Doug Bibby, NMHC President. “When this effort began, the future was far from clear. Today, while we still have a way to go, there are increasing reasons to be hopeful about the short and long-term prospects for the industry. We are looking forward to ongoing success as demand returns and the economic recovery strengthens.”
“The collaboration of efforts by the four organizations, and the generous financial support by Yardi, brings the rental housing industry resources to deal with the pandemic challenges that were not available prior to this project,” said Gail S. Phillips, CEO of the National Association of Residential Property Managers. “These tools are built to outlive the current pandemic and assist the industry into the future.”
For over 85 years, our members have made us the world’s strongest voice for all things real estate management. Almost 20,000 leaders in commercial and residential management call this home for education, support and networking. Our CPM®, ARM®, ACoM, and AMO® certifications are internationally recognized symbols of ethical leadership and a well-managed property. And our tools deliver decades of on-the-job know-how to help members get even better at what they do. Put simply – IREM and its members are here to elevate the profession. If you know real estate management, come get to know us. Visit irem.org.
The National Apartment Association (NAA) serves as the leading voice and preeminent resource through advocacy, education and collaboration on behalf of the rental housing industry. As a federation of 151 affiliates, NAA encompasses over 93,000 members representing more than 10 million apartment homes globally. NAA believes that rental housing is a valuable partner in every community that emphasizes integrity, accountability, collaboration, community responsibility, inclusivity and innovation. To learn more, visit www.naahq.org.
Based in Washington, D.C., the National Multifamily Housing Council (NMHC) is the leadership of the trillion-dollar apartment industry. We bring together the prominent apartment owners, managers and developers who help create thriving communities by providing apartment homes for 40 million Americans. NMHC provides a forum for insight, advocacy and action that enables both members and the communities they help build to thrive. For more information, visit nmhc.org.
The National Association of Residential Property Managers (NARPM®) provides resources for single family/small multifamily residential property management professionals. NARPM® is the premiere association designed for real estate professionals who know first-hand the unique challenges of managing single-family and small residential properties. NARPM provides an effective, professional learning environment for owners of property management companies and their employees. Visit www.narpm.org to learn more.
Yardi® develops and supports industry-leading investment and property management software for all types and sizes of real estate companies. Established in 1984, Yardi is based in Santa Barbara, Calif., and serves clients worldwide. For more information on how Yardi is Energized for Tomorrow, visit yardi.com.
Communication is a priority in 2021, necessitating the right tools, tactics and training are in place.
Marketing to potential prospects has grown increasingly sophisticated during the past decade. But the move from an old-fashioned grassroots approach to digital lead generation intensified during COVID-19.
“2020 really accelerated the rollout and adoption of technologies that allowed us to maintain continuity during a rapid transition to a virtual way of doing business,” says Melissa Brady, Vice President of Strategic Marketing at Fogelman Properties. “Given the pace of innovation and the corresponding change in consumers’ expectations for more virtual and self-service options, we will continue on this path while looking for ways to optimize and consolidate our MarTech stack.”
The situation is similar for interaction with current residents. Some property managers have reported that COVID cases spiked in their communities. “We have several properties where we have employees in quarantine or out ill,” says Steve Hallsey, Executive Vice President of Operations for Wood Residential Service. “This situation puts a lot of pressure on other site employees.”
Social distancing is essential to prevent these virus outbreaks, but it has made it difficult for onsite teams to connect with residents in ways in which they have grown accustomed.
“I think it’s a challenge, especially for some folks that are right out of college, to be able to connect with the residents and be authentic as they’re also trying to socially distance,” says JoLynn Scotch, Managing Director of Operations at Bozzuto.
To be successful in this environment, apartment operators need to think differently.
“Creativity is at a premium to maximize leasing velocity and generate higher retention rates,” says Woody Stone, Executive Managing Director of Operations Cushman & Wakefield, Multifamily Asset Management, Americas.
In a digital, socially distant world, there are many ways to introduce your brand to potential residents. For Cortland, social media has been a strong driver of leads during the pandemic.
“With more people working remotely, we’ve also noticed an increase in social media usage this year,” says Tim Hermeling, Executive Vice President of Marketing for Cortland. “As a result, we have shifted marketing dollars to social media advertising.”
In 2021, Fogelman plans to rely on customer relationship management (CRM) software to optimize its media mix and drive lead conversions. Once those leads come, it plans to roll out live chat and text options across its portfolio to maximize engagement with prospects and use artificial intelligence (AI) to respond to leads in real-time, 24/7.
On average, Brady says customers use 10 channels to communicate. Fogelman’s teams will need to lean on technology like CRM, AI, chat and text to identify viable prospects and respond in near real-time this year.
“This requires a continued focus on training so that our front-line teams are confident in not only managing these tools but also delivering personalized experiences and great customer service, virtually or in-person,” Brady says.
Before prospects get to an apartment operator’s front-line teams, they usually check out a property’s reviews. In the digital world, one can argue that online reviews are the new curb appeal. Depending on positive online reviews is nothing new. Review sites have been around for decades. But with apartment searchers cooped up at home, they may be even more critical.
“Drawing prospects to our properties is heavily reliant on positive online reviews,” Stone says. “In this virtual environment, a poor reputation is much harder to overcome.”
Good reviews start with good management. At Bozzuto, enhanced resident engagement and awards have increased customer satisfaction. Cushman utilizes various software options to enhance communication with its prospects or residents and address issues before they are posted online, which helps it elevate scores. “We have also been reminded during the pandemic how important it is to go beyond the basics of simply managing a unit,” Stone says.
During the pandemic, part of the management process has been working with customers who need help with payments. Technology, again, can play a role in these discussions. Scotch says her company has relied on its CRM during this time to put those customers on payment plans.
“It has been instrumental,” she says. “We also used Zoom and FaceTime as additional communication tools.”
In 2021, as in 2020, having the right tools to communicate with prospects and residents will help operators successfully navigate what is bound to be a challenging year ahead.
Les Shaver is a freelance writer.
Operators strive to give prospective residents certainty during uncertain times.
In 2020, the basic task of helping prospective residents feel confident that they’re making the right choice—while committing to a 12-month lease or longer—suddenly got a lot harder.
“This is a people business, and a critical part of it is building relationships with prospects,” says Breonna Scaccia, Property Manager at the Wellington, Fla.-based Bainbridge Companies, which operates 17,286 apartments. “But right now, you can’t shake hands. You can’t see facial expressions because of masks. You have less opportunity to connect in person.”
Amanda Miller-Torres, Regional Vice President for Atlanta-based Stonemark Management, says that currently, it’s all about making a personal connection despite the near total reliance on technology. “You’ve really got to learn and feel comfortable with the virtual sales approach, compared to being face to face.”
With uncertainty being the only certain thing about the future, here are the leasing techniques and strategies apartment industry thought leaders are using to fill their apartments today.
Connecting With Prospective Residents Where They Live: Online
From a marketing perspective, operators are relying more than ever than ever on active outreach and interaction with prospective residents.
“We’ve really increased our social media advertising and refined our digital assets and messaging,” says Dana Caudell, President of Property Management at Bainbridge. “People are spending more time on their phones, so it’s a powerful way to reach them. And if they can’t come for an in-person tour, that’s where they’re going to head to get a sense of the community anyway.”
But 2019’s advertising message about over-the-top amenities won’t cut it in attracting renters now. Instead, you’ve got to give them information about exactly what it’s going to be like to live at your community—and the level of safety you offer.
“Our advertising has really pivoted towards answering the FAQs of the day,” says Andre Washington, Regional Marketing Manager for Des Moines, Iowa-based BH Companies, which operates 97,000 apartments at 337 communities nationally. “We’re leading ads with information about tour offerings, hours and amenity status. That’s been key to drive prospects into the leasing funnel, whether they’re looking for a physical or virtual experience.”
Another reason operators are flexing their online presence today is because a mainstay of traditional leasing efforts—foot traffic—has for the most part been stripped from their toolbox.
“Walk-in traffic is all but nullified,” Washington says. “So you really need to be able to correspond with prospects through multiple online channels, with content that gives them an experience. We want our prospects to come away from interactions with our online content not only informed, but connected to the community as well.”
Options for Tours
Once those online and social media efforts drive prospective residents into your funnel, operators say it’s critical to meet them where they are mentally and emotionally while giving them the options to engage with you on their own terms.
“Our options for touring and leasing have really expanded,” says Lauren Campbell, Vice President, Asset Management, at Charlotte, N.C.-based Crescent Communities, which has developed more than 59 multifamily housing communities. “We really try to tailor them to that prospect’s comfort level with in-person contact.”
While some firms have resumed in-person tours where possible—with social-distance protocols in place—many potential renters today are still opting for a virtual tour first, not just for safety but as part of their process of elimination.
“A lot of potential tenants are using virtual tours to help narrow down their options and then following up with a self-guided or in-person showing,” says Aaron Galvin, CEO of apartment brokerage firm Luxury Living Chicago Realty. “I think that’s going to continue even after COVID. Especially for people relocating to a new city, it’s just more efficient.”
The Key Is To Give Them Options
“We’re offering a lot more options: Virtual, self-guided and in-person, socially distanced tours,” says Lee Ann Edwards, President at Boca Raton, Fla.-based Altman Management Co., which runs 8,000 apartments. “We’re also giving them better websites and strategies to make it easier for them to lease—texting, chatbots, Facetime, live feeds, social media, you name it.”
At Carlstadt, N.J.-based Russo Property Management, which operates 2,100 apartments, President Adam Pasternack is taking the all-of-the-above approach as well. “Today’s environment is still very much a hybrid,” he says. “We are actively inviting prospects into our communities and leasing offices, but doing it while adhering to all the proper protocols.”
Making the Connection
Once prospective residents commit to a tour, whether virtual, self-guided or in person, operators say that you have to do everything in your power to make a personal connection, despite Plexiglass sneeze guards, masks or whatever other barriers come in between you and them.
The reason? Many prospective residents are still unsure about what the future holds in the near term, says Caudell, “so it feels like a big commitment to sign a 12- or 15-month lease. You’ve really got to be attentive to their questions and proactively address their concerns—not just by telling them how you operate, but by showing them.”
Showing them includes making sure required cleanings are happening multiple times a day at apartment communities—which has become table stakes for prospective residents today. “They want to see staff wiping down surfaces and paying special attention to high-traffic areas like the pool,” Scaccia says.
They also want to know that you’re staying on top of protocols, enforcing mask requirements and observing social distancing when interacting with residents and prospective residents alike, even if it’s uncomfortable to do so.
For example, Galvin says prospective residents today have a keen eye, whether online or in person, and are constantly scrutinizing how closely communities adhere to the pandemic’s new social order. “Nearly every renter wants to know what precautions are being taken to ensure health and safety at a property,” he adds. “On tours, they notice the number of sanitizing stations, signs in elevators and in hallways about social distancing, and whether people wear masks. A lot of prospects get concerned if a pool has too many people at it.”
Pitching Amenities in 2020
At the start of COVID-19, amenities went from being enticing to problematic as residents complained that they were paying for features they couldn’t use. But now, more than seven months after initial shutdowns, observers say the drawing power of amenities has reasserted itself with prospective residents—if you operate them in the right way.
“How you’re managing amenities is important information to share,” says BH’s Washington. “Prospects look at it as an indication of how well-organized and well-run the community is.”
So you need to share exactly how you’re scheduling admittance to amenities for residents, and how often.
“Prospects really want to know how you’re prioritizing access to those areas during COVID-19,” says Bainbridge’s Scaccia. “Early on, we partnered with our vendor to create an efficient sign-up system that’s available through our portal. It makes sure as many residents as possible can use the amenity, while monitoring capacity. It also lets us thoroughly clean that area between visits.”
Emphasizing What They’re Looking For
Other areas that catch prospective residents’ attention today include the amount of outdoor space a community has—both in common areas and with apartments’ balconies and patios.
“Balconies and outdoor spaces have always been big sellers, but since the beginning of the pandemic, they’ve become even more desirable,” says Kim Boland, Director of Digital Marketing at King of Prussia, Pa.-based Morgan Properties, which operates 75,000 apartments. “When stay-at-home orders went into place, people used their balconies and outdoor spaces as freedom from the indoors to relax and get fresh air.”
But space where residents can get away from others inside their apartments is increasingly important as well. “Since most employers are still doing work from home, renters are looking for affordable apartments with additional space to work,” Boland says. “It’s a real bonus if that space is separate from where they sleep.”
Indeed, while many operators say their leasing velocity has actually held up or even improved during the pandemic, the types of apartments that prospective residents seek has evolved.
“Unit preference is the thing that’s really changed,” says Crescent’s Campbell. “Apartments that include work-from-home spaces are in demand. It could be a thoughtfully placed desk in a one bedroom, a den or even renting a smaller two bedroom so they have that space.”
Real Estate’s New Mantra: “Three Times the Follow-Up”
Another big change has come in what prospective residents have been doing once the tour is over. Whereas real estate’s traditional thrice-uttered mantra about location still rings true, for multifamily housing professionals on the front lines of virtual leasing, another truism has entered their lexicons: Follow up, follow up, follow up.
“We’ve increased our follow-ups with prospects,” says Barry Saywitz, President of the Newport Beach, Calif.-based Saywitz Co., which operates 1,000 apartments. “With our serious prospects, we’re being diligent with staying in touch to try to make deals as quickly as possible. That means processing of their applications and running credit expeditiously to avoid any opportunity for them to look at other options or change their mind.”
At Bainbridge, Caudell encourages her team to use any follow-up contact as an opportunity not only to close the lease but to show prospective residents the attention they’ll get once they move in.
“It’s so competitive right now, it’s critical to not only follow-up with prospects and build those relationships, but also to make clear that you’re there for them every step of the way,” says Caudell. “Virtual or not, it’s about the connection that prospect feels. Being attentive to their questions and proactively addressing common concerns makes all the difference.”
Caudell’s team has been leveraging email follow-ups with a link to the actual recorded virtual tour they went on so they can easily review it again.
For Campbell at Crescent, it comes down to providing what she calls “extreme customer service” after the tour. “Our teams are spending a significant amount of time on follow-up with each individual tour,” she says. “The most significant trend we’ve seen among prospects since COVID is an actual craving for connection. They want empathy. They want reassurance. They want individualized attention. We are really trying to show them the onsite team is going to go the extra mile.”
But most of all, they need personal contact.
“There are just some things that can’t be replicated through a virtual experience,” says JoLynn Scotch, Managing Director of Operations at Greenbelt, Md.-based Bozzuto Management Co., which operates 71,000 apartments. So, onsite teams must communicate more than ever with prospective residents to answer questions like, “How far is my apartment from the elevator?”
“There’s just more follow-up required in virtual leasing, which is ultimately a good thing,” adds Scotch.
Getting to Close
Once you’ve given prospective residents everything they need to make a decision, it’s still up to you to make sure their next move is signing a lease—with you. To get to that goal, operators say you really need to tell them why the community is a good fit for them. Of course, to do that, you need to have engaged with them and heard their specific needs from the start.
“Closing techniques that acknowledge that prospect’s specific needs and how the community effectively meets them are what’s most effective now,” says Washington. “You can’t just recap what the community offers, because that leaves a chance for uncertainty. You want to reassure them it’s a good fit.”
But you can’t just focus on relationship building and your staff’s individual interaction with prospective residents either. Online reputation management was already critical to successfully operating an apartment portfolio. Now it’s even more important.
“Since a precedent for apartment hunting and leasing in a pandemic does not exist, prospects are trusting and relying on the recent experiences of other individuals in similar circumstances even more,” Washington says. “Reviews really shine a light on your community—or dim your chances.”
Savvy operators recommend managing your community’s reputation online by addressing any negative comments in a constructive way, and doing what you can to encourage current residents to carry the online torch for you in the form of positive reviews.
Increased Momentum From Digital Interaction
One of the positives to come out of COVID, operators say, is that even though the new environment demands more from leasing staff in order to close, the implementation of so many digital tools across the industry has actually sped up the pace of leasing for some apartment operators.
“We’ve had a lot of success offering a completely digital process, from viewings to contracts, that has actually allowed us to accelerate closings,” says Ron Melendez, Vice President of Development at the Miami-based Related Group, which has built and manages over 100,000 residential apartments. “New residents have a completely digital experience when processing their leasing documents, payment and contract.”
For Boland at Morgan Properties, that’s one of the bright spots to come out of the chaos of 2020. “Even though the pandemic has significantly changed the leasing environment, this has only encouraged property managers to prioritize the use of technology,” she says. “That was already happening, of course, but the pandemic really expedited it.”
Still Keeping an Eye on Screening
None of this means that pros are renting to just anyone today. Indeed, with some operators reporting more instances of application fraud since the start of the pandemic, the more background information you have on prospective residents, the better. It’s important to keep the fundamentals of leasing in mind—by attracting and building rapport with well-qualified renters. Don’t avoid the increased challenges of leasing today by kicking the can further down the road and accepting residents who will create a collection problem later on.
“With the combination of new rent-control laws, moratorium on evictions and higher concern for the spread of COVID, you need to make sure you’re renting to new residents who can actually qualify and pay the rent,” says Saywitz. “It’s become increasingly difficult to remove problem tenants, so you’ve really got to be careful with your decisions on the front end.”
By engaging with prospective residents where they are, giving them the options they want for tours and paying attention to their unique needs, multifamily housing operators can succeed when navigating today’s leasing environment.
Joe Bousquin is a freelance writer.
Arlington, VA | December 22, 2020 — National Apartment Association (NAA) President and CEO Bob Pinnegar and National Multifamily Housing Council (NMHC) President Doug Bibby issued the following statement on the passage of a roughly $900 billion COVID relief package.
“NAA and NMHC congratulate Congressional leaders in both parties on the passage of a COVID relief package that will provide desperately needed support to millions of Americans who call an apartment home. We look forward to President Trump signing it into law.
“For the better part of a year, NAA and NMHC have been at the forefront of calling on policymakers to pass legislation which includes rental assistance as well as a number of other key priorities. While there remains much work to do in the coming weeks and months, this effort is clearly a step in the right direction and will come as welcome news for so many households facing financial distress. Importantly, this package includes:
- $25 billion in dedicated rental assistance
- $600 in direct stimulus checks
- $300 per week in enhanced unemployment benefits through March. Expiring unemployment programs for gig workers and long-term unemployed were also extended
- $284billion for a second forgivable Paycheck Protection Program (PPP) loan
“We are heartened that the legislation includes such critical resources that will allow those impacted by COVID and resulting economic distress to meet their financial obligations, including rent. Unfortunately, it also extends the current CDC eviction moratorium until January 31, 2021. Eviction moratoriums fail to address a renter’s underlying financial distress and do not address housing instability. The resources provided in this package, as well as future support that will need to be extended in 2021, are essential to addressing apartment residents’ financial challenges – not interminable moratoriums.
“NAA and NMHC will continue to work with policymakers on future legislation to ensure that residents and housing providers have the support necessary to allow for a sustainable and equitable recovery. As part of that recovery, targeted and limited liability protections for apartment firms will be a critical component of future COVID packages.”
For more than 25 years, the National Apartment Association (NAA) and the National Multifamily Housing Council (NMHC) have partnered on behalf of America's apartment industry. Drawing on the knowledge and policy expertise of staff in Washington, D.C., as well as the advocacy power of 155 NAA state and local affiliated associations, NAA and NMHC provide a single voice for developers, owners and operators of multifamily rental housing. One-third of all Americans rent their housing, and 40 million of them live in an apartment home.
With shared bathrooms and kitchens, older dorms may be rendered obsolete.
When COVID hit in March, colleges and universities quickly got students out of the classroom and switched to online learning.
“Obviously, operationally, they were not prepared to implement what would become the social distancing norms and all the CDC practices,” says Bill Bayless, CEO of American Campus Communities on CBRE’s The Weekly Take. “And so when you go back to March, there was really a panic…”
Over the past six months, Bayless says things have stabilized, and universities have adopted CDC social distancing standards. “They have all put infrastructure in place to have the flexibility to be online when they need to be in person when they can be…,” he says. “And so while it’s certainly not business as usual, higher education is underway again. Students are achieving their educational objectives and goals. And for the most part, they are back in their college towns…”
While universities seem to have put the proper structures in place, some students still aren’t getting the message. In late September, The New York Times reported that more than 35 colleges had at least 1,000 cases of COVID. Two hundred thirty colleges had more than 100 cases. The paper said that large university towns like La Crosse, Wis.; State College, Pa.; and Gainesville, Fla., have experienced sizable outbreaks at universities.
Jake Jarman, COO of Redstone Residential, says he has seen a surge of COVID cases among students in the last few weeks. Redstone is making an effort to educate residents about the dangers of COVID.
“We are being aggressive with our marketing campaigns to remind our residents about social distancing and good hygiene,” Jarman says. “Many of the college-aged students believe that their immune system is invulnerable to this virus.”
In some cases, student housing has seen demand increase after COVID hit. Bayless says his portfolio had 93% rent collection in April, May and June. During that time, ACC’s apartments picked up 1,000 new residents when colleges and universities told students to leave.
Bayless says older, on-campus housing, with its shared baths and kitchens, may be rendered obsolete in the future because it does not meet CDC guidelines. That should create an opportunity for companies that create modern student housing, where a pod of four students can share kitchens and can self-isolate.
“When you look at what are the real opportunities for companies like American Campus post-COVID, it is to continue and to modernize that housing,” Little says. “So, there is likely going to be a second building boom on-campus post-COVID as universities deal with the weaknesses of those products.”
Many apartment community operators have responded to COVID-19-related staff challenges by trying to alleviate stress.
Many apartment community operators have responded to COVID-19-related staff challenges by offering employee counseling programs, virtual Zoom parties complete with deejays and costumes, and sometimes cash bonuses or gift cards to help alleviate the stress.
BH Management has paired employees together through an outreach program to keep workers positive through the crisis. “We provide employee assistance program services for our team members who need additional help working through the stress while going through the pandemic and have mentors along the way for them to lean on when times get too much,” says Senior Regional Vice President Melody King. “We try to remind them continually to have fun. We host parades, online reading clubs, virtual exercise groups, food trucks and provide pop-in surprises for our teams and residents to ensure that they know we are always here to support them in any way we can.”
Marcie Williams, President of Charlotte, N.C.-based RKW Residential also says her firm is helping employees cope through its own employee-assistance program. “We’ve really encouraged our employees to call and utilize the counseling services if they’re stressed about work,” she says, adding that the company is also considering cash incentives.
The Altman Companies has increasingly focused on keeping morale high as the pandemic has worn on, says Chief Operating Officer Tim Peterson. “We’ve been working hard to keep our teams connected. We can’t bring them together physically, but we’ve had a series of virtual hangouts that have included our top leadership calling out and recognizing success from our people in the field. We’ve had a deejay and themes for everyone to dress up and express themselves. The consistent message has been that we are all in this together, and that we are going to win, despite these obstacles.”
A favorite sports team party with staff members dressing as a University of Florida Gator and a Florida State University cheerleader; and a Fourth of July party where an American flag cowboy hat, boots and shirt were on full display.
Audubon held a video contest for staff at its different apartment communities so employees could show how they’ve been coping, with gift cards and dinner on the company as the main prize. “One of our teams did a video showing how they clean all day, wiping down every surface while wearing masks, and they had fun with it; it was hysterical,” says Tammy Shields, Chief Operating Officer. “People are trying to approach it with humor, and we’re doing stuff like that to keep people motivated and happy to be at work.”—J.B.
Pet fees are up while late fees are down.
As the COVID-19 pandemic continues to cast a long shadow over the rental housing industry, ancillary revenue would seem to be a low priority. In previous years, collecting ancillary fees was an important — though legally fraught — concern. But now, with job losses mounting around the country, many apartment operators are simply focused on collecting rent on time.
For example, Haven Realty Capital, based in El Segundo, Calif., is sacrificing the flow of one ancillary revenue stream in exchange for trying to keep its residents in place. “Month-to-month premiums were waived to allow flexibility for residents who had lease expirations during the pandemic months,” says Sudha M. Reddy, Managing Principal of Haven.
In a recession, apartment operators are justifiably focused on just “keeping heads in beds.” Operators may even need to think twice about imposing ancillary fees.
But in the longer term, the COVID-19 lockdown may present new revenue opportunities, if residents receive financial relief and the unemployment situation stabilizes. If trends such as teleworking become commonplace, the COVID-19 lockdown could change the way residents use energy and bandwidth and give operators the chance to consider residents’ high-speed connections to the outside world.
Not Pressing the Issue
The general rule for multifamily ancillary revenue is about 5 percent of total income, but many of the fees are also accompanied by attendant costs. In the short term, Max Sharkansky, Managing Partner of Trion Properties, based in West Hollywood, Calif., is more concerned about on-time rent payments.
“We [could] charge higher pet rates and higher lease-break fees, but we’re just not pressing that issue because it’s tough out there,” Sharkansky says. “We’re signing leases, we’re doing fine, our collections are in the mid-90s. But we’re also in a 12 percent unemployment market, so I don’t know if this is an optimal time to start increasing our fees.”
As the amenity wars heated up during the past decade, ancillary revenue took a back seat to services, such as dog walking. But as the recession lingers, those services are also in jeopardy.
“It’s so hard to compete on what has become a commodity,” says Brian Zrimsek, Industry Principal of the tech firm MRI Software, based in Solon, Ohio. “The apartment can only be so big; the pool can only be so grand. So we found operators moving to adding services, dog-walking services, laundry pickup services and yoga classes — amenities as a service. But when a recession comes, that’s the first thing to go.”
This strategy is a throwback to the 2008 housing market collapse. “In 2008 they lowered prices and increased terms to lock people in,” says Zrimsek. “They’d rather have sure but thin revenue. In good times, it’s okay to have a little nickel-and-diming for things. We’re also seeing concessions come back. It would not surprise me if things that people charge for in the best of times they change their mind on now.”
Sorry, You’re Late
Early in the pandemic, municipalities, states and the federal government moved to curtail evictions and late fees to help keep residents in their homes. Now, six months into the crisis, what were once seen as temporary measures are being extended in many parts of the country as the apartment business takes the hit.
At Haven Realty Capital, late fees have traditionally been a large revenue stream, followed by pet rent and admin fees. “[But] late-fee revenue has dropped to zero since April,” Reddy says. “The moratorium on late fees has also eliminated the incentive to pay on time, resulting in a delay in our collections at some of the properties.”
It’s the same story at Trion Properties, as Sharkansky simultaneously eyes what’s happening in collections and the state legislature. “We’re in California, and not allowed to charge late fees,” he says. “In California, it’s open-ended. It’s a function of when they remove the emergency order. In Oregon, it was set to expire but was then extended to Sept. 30. We still get the majority of our rents in the first week [of the month], but the next 20 to 25 percent are paying in the following three weeks.”
As many residents have been hunkered down for months now, apartment operators are seeing an increase in their energy and data consumption. Even before the pandemic, says Todd Richman, Senior Vice President at Morgan Properties, based in King of Prussia, Pa., marketing contracts with cable providers and Internet providers did well for his company.
Richman is predicting that addiction to Netflix and Zoom dependence is going to raise the income from fees. “I would assume that once we see the numbers, we might have higher income from these services,” he says. “With people working from home, they may have had to upgrade to a better Internet service, they may have ordered more services. It’s possible it’s remained the same. But I’m expecting Internet penetrations to be higher than they’ve ever been.”
Laundry rooms are another small but reliable revenue source for Morgan, and Richman is expecting to see an uptick — again, because people are spending more time at home.
Trion’s Sharkansky also is bullish on laundry. Trash collection, water usage, pest control and sewage fees are also looking up. “Ratio utility billing [RUBS] is huge,” he says. “Although I don’t know if you can qualify that as ancillary income; it’s more of an expense reimbursement, but it’s on the income side of the P&L.”
Doggy Day Care
The pandemic has been a huge boon for pet adoption, according to a number of sources. The consensus is that people who had been putting off getting a dog or cat because they didn’t spend enough time at home suddenly have no excuse.
In April, Kitty Block, CEO of the Humane Society, told the Chicago Tribune, “I think it’s a combination of reasons. We’re going through a global pandemic, and its anxiety-provoking and it’s isolating. Those who are fortunate enough to work remotely are doing it from home, so people have the time now and the desire to open up their homes to a pet, to give that animal a chance.”
The trend is confirmed by the numbers Trion Properties is seeing. “In April, May and June we had an uptick in pet fees,” Sharkansky says. “Looking at year-over-year for June, portfolio-wide, we did about $9,400, and last year [it] was around $7,000, so we’re seeing a 34 percent increase.”
But even enforcing pet fees will likely get some pushback from residents, demonstrating, once again, that at this point in time, fees are a touchy issue
“I don’t know that the first thing a resident does when they get a pet is call the office and let us know,” says Richman of Morgan Properties. “We’re trying not to be intrusive to residents about being in their apartments. We’re not doing walk-throughs of each apartment; it would be very hard to do that.”
Scott Sowers is a freelance writer.
ARLINGTON, VA | July 27, 2021 – The National Apartment Association (NAA) today filed a lawsuit in the U.S. Court of Federal Claims to recover damages on behalf of rental housing providers who have suffered severe economic losses under the U.S. Centers for Disease Control and Prevention’s (CDC) overreaching federal eviction moratorium. The CDC’s prolonged order directly harms those who provide critically-needed rental homes, jeopardizes the long-term viability of housing infrastructure and sets a dangerous precedent for future disaster-response measures.
Apartment owners and operators have continued good-faith operations throughout the COVID-19 pandemic and are now left to shoulder $26.6 billion* in debt not covered by federal rental assistance. The suit, NAA et al. v. The United States of America, argues that the CDC order has curbed several rights under the U.S. Constitution including: the right to access the courts, the freedom to contract with others absent government interference, the right to demand compensation when property is taken by government action and the limits of federal government power. With little hope of receiving additional federal assistance, NAA is seeking to limit the loss borne by rental housing providers and, ultimately, clear the debt records of their residents. Doing so will help secure the long-term health of the rental housing industry and ensures households across the income spectrum have continued access to rental housing.
“America’s 40 million renters will still need a place to call home tomorrow, next year and next decade,” said Bob Pinnegar, NAA President and CEO. “The CDC’s irresponsible eviction policy has jeopardized not only the availability, but also the future cost of rental housing and leaves renters saddled with crippling debt. NAA is standing up for an industry – and its residents – that are left holding the bag on $26.6 billion in rental debt after operating under extreme conditions for 16 months. The government has intruded into private property and Constitutional freedoms, and we are proudly fighting to make owners whole and ensure residents’ debt is wiped from their record.”
Though the federal government has allocated roughly $47 billion in federal rent relief in combined December 2020 and March 2021 legislation, it took more than nine months for Congress to do it. This prolonged inaction, paired with a sluggish roll out and the CDC eviction moratorium, has allowed rent debt to continue to balloon – devastating the industry in the short-term and fueling the housing affordability crisis, to the detriment of the broader economy, in the long-term.
NAA is represented by two firms, Dorsey & Whitney and the law office of John McDermott.
This lawsuit is open to all rental housing providers operating in a state or locality under the federal moratorium who have been damaged by the CDC eviction moratorium. For more information about the lawsuit, please visit here.
The rental housing industry should not be held solely responsible for solving our nation’s housing crisis, which has been exacerbated in this pandemic, and government agencies should not have the authority to disregard constitutional rights and trade one crisis for another.
*$57.3 billion in rent debt at the end of 2020 (Urban Institute) + $8 billion in Q1 2021 (MBA) + estimated $8 billion in Q2 2021 (MBA, Q2 numbers expected soon) - just under $47 billion in allocated rental assistance = $26.6 billion in unfunded rent debt (and climbing)
The National Apartment Association (NAA) serves as the leading voice and preeminent resource through advocacy, education and collaboration on behalf of the rental housing industry. As a federation of 149 affiliates, NAA encompasses over 93,000 members representing more than 10.5 million apartment homes globally. NAA believes that rental housing is a valuable partner in every community that emphasizes integrity, accountability, collaboration, community responsibility, inclusivity and innovation. To learn more, visit www.naahq.org.
On May 7, 2021, the Biden Administration announced the allocation of an additional $21.6 billion for emergency rental assistance that was passed earlier this year through the American Rescue Plan Act, which is referred to as Emergency Rental Assistance 2 (ERA 2) by the United States Department of Treasury (USDT). With the new monetary allocation, USDT released updated guidance which contains new program requirements for grantees who distribute rental assistance.
The new guidance removes a number of barriers that the rental housing industry has called out, such as prohibiting programs who receive ERA 2 from denying assistance to eligible residents solely because they reside in federally assisted housing. This ensures that the nation’s most vulnerable renters remained stably housed throughout the remainder of the pandemic. Additionally, the new guidance establishes an online hub of local emergency rental assistance program links to make it easier for renters and landlords to find programs in their area.
There are several problematic requirements that were included in the newly published guidance. The document allows ERA 2 programs to offer direct-to-resident assistance first and immediately – not requiring programs to go to housing providers beforehand. Additionally, the guidance continues to allow programs distributing ERA 2 to offer direct-to-resident assistance when a housing provider opts out of participating in an ERA program. However, if an ERA 2 grantee chooses to seek the cooperation of housing or utility providers before providing assistance directly to residents, Treasury strongly encourages the grantee to apply the same ERA 1 requirements. NAA encourages members and affiliates to reach out to their state or local program and encourage grantees to choose to continue to seek the cooperation of housing providers, to ensure direct payments to housing providers continue.
Another new requirement in the guidance is that programs must prohibit the eviction of renters for nonpayment in months for which they receive emergency rental assistance. Additionally, Treasury strongly encourages grantees to require that housing providers not evict residents for nonpayment of rent for 30 to 90 days longer than the period covered by the emergency rental assistance as a condition of receiving payment. While some grantees have this in place, affiliates and members should expect more programs to enact these protections in the near future.
Other noteworthy changes in the guidance and White House fact sheet include:
- Changes the required response time for housing providers electing to participate to 7 days when reaching out by mail and 5 days when reaching out by phone, text, or email. Previously, programs were required to wait 14 days when reaching out by mail or 10 days when reaching out by phone, text, or email before offering relief to a tenant directly.
- Widens the scope of qualified expenses to include “moving expense, security deposits, future rent, utilities and the cost of a transitional stay in a hotel or motel when a family has been displaced” and does not require the qualified expense be related to COVID-19 outbreak.
- Strongly encourages grantees to avoid establishing burdensome documentation requirements that are likely to be barriers to participation for eligible households, by allowing programs to verify eligibility of low-income renters based on readily available information or “proxies”, such as the average income in the neighborhood in which they live.
- Requires programs to prioritize assistance to low-income households and those with members who have been unemployed for more than 90 days. To help ensure that assistance is reaching those who most need it most – especially those with incomes below 50 percent of the area median income – grantees are now required to report how they will achieve the required prioritization of assistance.
- Encourages additional legal services and support to hard pressed residents. HUD is developing a $20 million demonstration to provide legal assistance to low-income residents at risk of or subject to evictions. More information on this new program can be found here.
- Advances the Nation's understanding of evictions in the marketplace. HUD will continue to build out a research agenda for helping the field better understand the prevalence of evictions and the disparate impact they have on disadvantaged communities. This includes assessing how the federal government could develop a national database of evictions.
NAA continues to communicate with USDT and Congress on changes and additional clarifications that should be made to ensure that the program continues to be executed in an efficient and timely manner. If you have any questions regarding the emergency rental assistance programs, please contact Jodie Applewhite at [email protected].