News & Research Listing
U.S. Apartment Market
After exhibiting signs of revitalization during Q3, the apartment market ended 2020 with a mixed performance. Both occupancy and rents descended, yet absorption stood closer to pre-pandemic levels. Difficulties from the coronavirus pandemic and typical seasonality challenged market fundamentals. As reported by RealPage, U.S. occupancy dropped slightly by 0.2 percentage points year-over-year to 95.6%, although returning to the same rate as Q1 2020. Occupancy declines varied also from market to market. According to REIS, Lexington, Albuquerque, New Haven, Dayton and Wichita were among the strongest markets for occupancy growth year-over-year. Meanwhile, Washington, D.C, Louisville, Fort Lauderdale, Fairfield County (Conn.) and Raleigh saw the highest increases in vacancy.
Rental rates further declined as properties competed against each other for the shrinking pool of renters. Effective and asking rents averaged $1,383 and $1,453, respectively, both falling 1.4% since Q4 2019. Comparing 2020 to 2019, rent growth fell by an astonishing 3.1%. The robust drive toward smaller markets persisted given that many renters have chosen to migrate away from major markets. According to REIS, Lexington, Memphis, Chattanooga, Las Vegas and Sacramento ranked highest for rent growth. Major East and West Coast markets such as San Francisco, New York City, San Jose, Washington, D.C. and Oakland continued their downward trends for rent growth. However, there is optimism that the rollout of the vaccine and subsequent economic boost will restore multifamily demand for some gateway markets. RealPage projects that rental rates will likely return to pre-pandemic levels by the end of 2021, and then begin to increase by the end of 2022.
Apartment demand delivered a remarkably solid performance during the fourth quarter given the challenges of 2020. The fourth quarter brought total annual absorption to 344,380 move-ins, higher than the 2019 quarterly average of 279,494 move-ins. RealPage reports that Dallas, Atlanta, Houston, Phoenix, Denver and Charlotte led the nation for apartment demand during 2020. New construction totaled 296,115 annual units, below the 2019 quarterly average of 325,801 units. Since many delayed projects from 2020 are near completion, more than 403,600 units are expected to come online during 2021.
According to the U.S. Census Bureau, the seasonally adjusted annual rate for multifamily construction starts in December 2020 amounted to 312,000 units, a considerable decline of 40% year-over-year. Alternatively, total deliveries increased by 5% to 422,000 units. Multifamily building permits decreased 7.8% to 437,000 units. The top-ranking markets for permits issued during 2020 included New York (40,283 units), Houston (15,796 units), Austin (18,799 units), Los Angeles (15,796 units) and Dallas (15,133 units).
U.S. Capital Markets
Multifamily investments rallied at the end of the year. According to Real Capital Analytics, 6,945 properties totaling 325,345 units sold during the quarter for $55.4 billion. This was a considerable improvement in activity from the previous quarter. However, the fourth quarter still revealed a decline of 27.1% in investment sales activity compared to Q4 2019. The average price per unit increased to $188,477, up by 2.6%. The average cap rate was 5%, down by 113 basis points. Garden-style asset sales totaled $36.2 billion during Q4 2020, while mid-/high-rise properties totaled $19.2 billion. Dallas, New York City, Los Angeles, Atlanta and Phoenix were the leading markets for deal activity during 2020. Radco Companies pulled off the biggest deal of the fourth quarter. The real estate developers sold four properties to Sunstone Properties Trust, Phoenix Realty Group, Bridge Investment Group and TruAmerica Multifamily totaling 1,656 units for a combined $242.8 million. The properties that were traded are garden-style assets located throughout Florida markets. U.S. Economy
Although GDP rebounded nicely in the fourth quarter, the labor market continued to struggle. After job declines numbering 227,000 in December, just 49,000 jobs were added in January. That leaves 10 million jobs lost to the pandemic, half of which are expected to be permanent, according to Moody’s Analytics. The retail trade and leisure/hospitality industries have been disproportionately impacted during the pandemic. During the past three months (November-January) leisure/hospitality has shrunk by 587,000 positions as total non-farm payroll employment across the U.S. increased by 86,000. The unemployment rate in January dropped to 6.3% due both to the job additions as well as a decline in the number of people in the labor force.
Weekly filings for unemployment also showed no signs of a turn-around, with initial claims consistently above the highest pre-pandemic levels. As of mid-January, approximately 17.8 million people were filing for some sort of unemployment benefit compared to only 2.1 million a year prior.
The good news heading into February was that COVID-19 cases and hospitalizations were down, while the bad news came by way of new variants spreading, some of which may be vaccine-resistant. As with many indicators throughout the pandemic, there is a wide range of variance among sectors and geographies. The Moody’s/CNN Business Back to Normal Index tracks 12 high frequency data series plus monthly employment figures, using February 29, 2020 as the baseline for “normal.” At the national level, the daily index ranged between 81 and 82 for nearly a month as overall activity died down after the holidays and inclement weather kept many indoors. The discrepancies and activity were evident in state-level data, with Florida operating at nearly 92% of normal levels while New York lagged at 70%. It is important to note that while uncontrollable factors such as weather affected the Index, so too did various levels of state and local restrictions, vaccine distribution, COVID-19 cases and basic demographics.
The vaccine rollout, despite its many limitations, along with the $900 billion stimulus package passed at the end of 2020 brought optimism to business leaders, economists and analysts. Many organizations, including the Board of Governors of the Federal Reserve System, lifted their GDP forecasts and lowered their unemployment rate forecasts for 2021 and 2022. There seems to be little doubt, however, that the first quarter of this year—perhaps extending into the first half—will be challenging as the virus remains largely uncontrolled.
The rental housing industry also remains bifurcated with many of the market indicators discussed in this report mainly reflective of larger, institutional-grade, professionally managed properties that overshadow the plight of small, independent owners. Without more assistance from government and other entities to help cover rent shortfalls amid eviction moratoria, these owners could be forced out of business. And should the economic recovery slip, these impacts could easily bubble over into larger segments of the market.
Paula Munger, Assistant Vice President of Industry Research and Analysis and Leah Cuffy, Research Analyst are both from NAA.
Property managers have become good innovators to ensure the safe enjoyment of amenities amid the challenges the pandemic has presented.
In recent years, amenities have become a magnet to attract residents, spurring a war of better equipped gyms, swimming pools and communal kitchens, as well as a collection of experiential services, from dog walking to outdoor yoga to mixology classes.
Because of the pandemic, however, property managers have shifted their focus to developing the safest protocols for residents to share facilities and services.
Although there is no one-size-fits-all solution, trends are emerging. Some are influenced by design professionals who are reconfiguring existing spaces and adjusting projects on their drawing boards and others by the colder weather that necessitates certain precautions.
The healthfulness of a building and its shared spaces is now considered an amenity and many managers retrofit them with well-ventilated, expensive HVAC systems, says architect Victor Body-Lawson, founder of New York City-based Body Lawson Associates, Architects & Planners. “We want to stop the transference of COVID-19 as much as possible,” he says. “There’s increased attention on the systems you don’t see but breathe, so air is treated properly indoors before expelled outdoors.”
To upgrade existing systems, owners might pay a 10% premium or 5% for similar upgrades in new construction projects, Body-Lawson says. Those who find these efforts cost prohibitive could consider cost-effective alternatives, such as portable, stand-alone air purification systems with ionizers, UV sanitizers and HEPA filters that work with existing systems.
Buildings of the future will likely be constructed from the start with systems that exchange fresh air in the best possible way. “More renters have this expectation in a post-COVID-19 world,” says Jared Minatelli, Director of Asset Management at Advance Realty Investors, a developer and manager based in Bedminster, N.J., which is redesigning a building in Harrison, N.J., to make it as healthy as possible.
Heavily trafficked spaces are also improved. Optima Inc. installed bi-polar ionization technology in elevators at its 57-story Chicago Optima Signature building, which continuously cleans air, reduces odors and fights many bacteria, viruses and molds, says President David Hovey Jr.
Distinct Trends for Outdoor and Indoor Amenities
Since the beginning of the pandemic, both exterior and interior spaces have been adapted and reprogrammed for safer active and passive use. This helps keep current residents engaged and has attracted new renters as well, says Mary Cook, founder of Chicago-based Mary Cook Associates, a commercial interior design company that has been involved in developing creative solutions in response to residents’ needs today as well as pre- and post-COVID-19.
“Pets, plug-ins, and packages are leading the way for resident needs, and we are responding with innovative remote workspaces, outdoor fitness, pet-friendly activities, better package handling and fun social activities over Zoom,” Cook says.
Outdoor space has never been more popular in apartment settings, even in winter, says Kris Lindahl, CEO and Founder of Kris Lindahl Real Estate in Blaine, Minn. Architect John Cetra of New York City-based CetraRuddy Architecture confirms this. “Almost every building we now help design has some type of outdoor space, either at ground level, off an amenity floor or on the roof,” he says.
The pandemic has intensified the effort to draw residents outdoors. For example, at the Optima Signature building, multiple outdoor living spaces are each equipped with fire pits, heaters and grills, Hovey says. Buildings have also spaced out their furnishings or replaced large couches with smaller movable pieces for distanced seating groups, Lindahl says.
Aspire Residences, developed by Draper and Kramer, opened in Chicago last August with a large deck off its fourth floor with three separate resort-style cabanas, each with a TV. Other buildings add grills, mini kitchens, music, lighting and overhead covers.
Studio-MLA, a landscape architecture and urban design firm, altered plans at a new rental building in Santa Monica, Calif., to include a large lounge area that can be broken into smaller groupings rather than have a pool and one big social deck, says Kush Parekh, Associate Principal and Landscape Architect.
Similar changes are also occurring at ground level. Body-Lawson’s firm is setting up “parklets” that extend from sidewalks—akin to what others call yurts or igloos—to give residents a safer, warmer and well-illuminated place to eat or converse privately.
Landscaping is used as a natural divider, which CetraRuddy did when it designed distinct areas at its ARO building in New York City. There management limits use to residents who pay to join a club, Cetra says. Other managers require residents to schedule visits on an app or email list, with time built in to clean and sanitize, says Minatelli. “As more stay home and cook, grills get greater use,” he says.
Some developers and managers also reconfigure square footage for the most popular, safest uses. For example, Chicago-based Waterton, a value-add developer, is constructing walking paths, dog runs, bocce ball courts and switching out infrequently used tennis courts for soccer fields, says Lela Cirjakovic, Executive Vice President of Operations.
At Advance Realty’s Harlow building in Hoboken, N.J., a courtyard is being resurfaced with turf. Some buildings go further and develop parks for residents and the community to share, which Lendlease, an Australian-based developer, did with land outside its Cooper at Southbank Chicago building.
Many managers are mixing up strategies to pare numbers and improve safety, closing some shared spaces—gyms and pools— limiting numbers through apps or reduced seating, unplugging fitness equipment and removing high-contact points like coffee machines that are hard to keep sanitized, says Jake Dietrich, Vice President of Development at Milhaus. His company also uses security cameras and staff to encourage social distancing. “We’ve been pleased by the willingness to comply,” he says.
Just as certain outdoor amenities have become more popular in winter and during the coronavirus, some indoor amenities have gained greater traction among residents. Game rooms with a sports simulator have become one of the most popular and appeal to all ages, says Aspire’s Manager Caitlyn Van Senus. Optima Signature has a golf simulator, too, along with a full-size basketball court and lap pool, available by reservation.
Also high on many residents’ wish lists are offices that give residents a change of scenery and privacy if they share an apartment. Aspire’s three glass-enclosed offices let occupants see others but socially distance while working. Some buildings do this in a more flexible way with movable partitions as needs change, especially for Zoom meetings or podcasts, says Body-Lawson.
Sterling Properties favors “cool” banquettes with partition walls, says Nick Hollenbeck, Director of Sales and Marketing. The company also furnishes lounge areas for working from home with furniture that has built-in outlets to power up laptops and mobile devices. De rigueur is strong, free Wi-Fi, says Van Senus.
Because seeing nature is considered a boon to wellness, Lendlease will devote part of the amenity space at its forthcoming Cirrus and Cascade buildings in the Lakeshore East community to a south-facing, plant-filled conservatory that looks out through floor-to-ceiling glass on a park. “It will be a nice place for quiet, to read or meditate when it opens this year,” says Linda Kozloski, Creative Design Director.
Spaces that cannot be safely used for their intended purposes may be repurposed. Some of Body-Lawson’s clients, especially those focused on affordable housing, set up living quarters for family members who test positive for the coronavirus and do not have another place to go. “They can stay until they recover,” he says. A vacant apartment can be furnished as an office for working from home, which 727 West Madison is doing. Also, lobbies designed to be places for residents to meet at their coffee shops and juice vendors now function as “exchanges” to pick up package deliveries, says Parekh of Studio-MLA.
To replace that sense of lost community, many managers look for other ways to keep residents not feeling isolated. “It’s all about reimagining typical community activities in a shared space now electronically,” says Kozloski.
Activities have gone far beyond the ho-hum. For example, Lendlease has hosted gingerbread house competitions and area retailer pop-ups. Aspire offers residents’ virtual craft beer tastings, cooking demonstrations and sip and paint classes with supplies prepackaged to grab-and-go or be dropped off at each participant’s door. Advance Realty management has organized pastry classes, floral arranging and hired restaurants to prepare and deliver food residents order to their door, a spin on room service.
The latest way some up the ante is for mobile vans to travel to their sites. Cocktails? Check. Food? Yup. And a dental clinic on wheels eases fears of those about going into a traditional office.
Once life returns to the new normal, many expect the combination of being safe and creative will continue. “I think Zoom and teleconferencing are a part of our lives. They offer great savings since you don’t have to travel or expend energy and time to get to work or a class,” says Body-Lawson.
What may change may be technology that makes buildings smarter, and help in controlling costs and better inform decision-making, from the size of amenity spaces to reconfiguring uints to resident and staff communication.
Barbara Ballinger is a freelance writer.
Sidebar: More Deals
To remain competitive as residents switch buildings or locations, more buildings use rent concessions as an amenity.
When 727 West Madison opened in Chicago, it leased 90% of its apartment homes and did not need to offer concessions. Then the pandemic hit, leases got competitive as people left the city and broke leases, and it started offering concessions of a few months, depending on a floor plan and base rent, says the Building’s Manager Beth Argaman.
Aspire Residences in Chicago has followed a similar strategy. It now offers up to three months free on certain floor plans. “We increased that since we saw some nearby buildings offer one to two months,” says Property Manager Caitlyn Van Senus. Her company has also found it important to offer the latest fiber networking and wireless throughout common spaces and the lowest rates in apartment homes, plus a choice of providers.
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.
With urban falling out of favor, could it be time to buy?
Like many apartment owners, Greg Mutz, Chairman and CEO of AMLI Residential, has witnessed increased renter migration since the pandemic hit.
“We’re seeing a lot of relocations into Denver and Dallas and Austin from the West Coast,” Mutz says.
There is data to back what Mutz and other apartment executives are seeing. A recent Linkedin survey found that New York has suffered a 23.4% decrease in net arrivals, while San Francisco saw a 21.1% decline. On the other hand, Jacksonville saw a 10.7% increase and Salt Lake City posted a 9.6% increase.
Others are seeing similar movements.
Joe Lubeck, CEO, American Landmark, has seen residents move into his suburban Sunbelt apartments during COVID. “We’re focusing even more on suburban, which we’ve always done anyway,” he says. “We’re focusing more on garden-style than mid-rise. Both of these changes appear to reflect changes in attitude and concerns from the pandemic.”
While people might be moving from urban to suburban properties in market-rate properties, Daryl J. Carter, Founder, Chairman and CEO of Avanath, hasn’t seen this trend materialize as much in the affordable sector and his 11,000-apartment portfolio. Many of those residents don’t have the luxury of working from home. They have to go into work every day.
“We don’t see that changing because people want to be closer to where their jobs are,” Carter says.
The movement from expensive, cramped cities like San Francisco and New York for more affordability and space in smaller metros, like Boise and Nashville, has been well documented. But it may not be the only reason for this migration. Before the pandemic, corporations were pushing out of high-cost states like California for lower-tax destinations like Texas.
“It does feel like you’re going to see some companies move out and maybe a bunch of other companies relocate to low-cost, business-friendly states,” says Robert Lee, President of JRK Property Holdings.
Like many industry executives, Lee is trying to figure out if this shift to the suburbs is permanent. If it isn’t, or if a certain number of people decide to return to major metros, it might be time to buy.
“You have to decide whether it’s a permanent or temporary effect,” Lee says. “Are you seeing a very hot blue-to-red state migration play? Do you like Florida and Texas and that job creation, low regulation, low or no personal income tax story?”
Mutz thinks cities like Los Angeles, San Francisco and Seattle will eventually come back. He isn’t alone. “It doesn’t feel like most parts of the Midwest or the Northeast where you see a very continued out-migration of jobs over a long period of time,” Lee says. “I think we feel like the health of California is still there.”
Ken Valach, CEO of Trammell Crow Residential, is also skeptical that people will move from cities in droves.
“There is all of this thought that no one is going to live in San Francisco, New York and Los Angeles,” Valach says. “Maybe they won’t, but I don’t really believe it. Look at New York after 9/11. There was never going to be another high-rise built. Twenty years later, there has been so much built, and so many new people have moved there. Over time, everything regresses to the mean.”
Valach says these urban assets may provide a buying opportunity for urban investors. “If I were a core plus fund investor, I’d be looking at going into these urban locations to buy deals at less than cost [to build] potentially,” he says. “There is not a lot of competition with how rent rolls may have been impacted. You put low-cost debt on it and hold it for five to seven years.”
For more than a decade, JRK has been buying suburban apartments for better yield. But the current problems in the urban markets could present some buying opportunities. While some investors may be making micro plays to pick up suburban apartments or apartments in primary or secondary markets, JRK is a believer in a regression toward history.
“Now everybody wants to get out of the urban core and go buy suburban,” Lee says. “I like suburban, but if everything were trading equally and I could buy Manhattan at the same cap rate as I’m buying in Long Island, I’m going to buy Manhattan. That’s no brainer.”
Les Shaver is a freelance writer.
Concessions are back, but could quickly disappear.
In 2020, many property managers had to deal with something they hadn’t seen in a decade: Widespread concessions.
In September, Zillow reported that the percentage of rental listings featuring concessions hit 30.4% in July. By comparison, only 16.2% of listings had concessions in February—before widespread COVID stay-at-home orders went into effect.
While concessions aren’t an issue across the board in the apartment industry, they are a problem for certain assets. Widespread concessions came back in a way in 2020, but they don’t look quite the same as a decade ago, with companies experimenting with incentives that don’t include a discount in rent. The good news is that they may not stick around as long as they did then; many operators hope that once a vaccine arrives, concessions will quickly burn off.
A Problem in Certain Places
In urban areas, which many residents have fled as they seek more space during the pandemic, concessions have become a big concern, according to Steve Hallsey, Executive Vice President of Operations for Wood Residential Service.
“Concessions on the urban assets have increased dramatically, impacting renewals as well as new leases,” Hallsey says.
Some people see concessions sticking around in cities for a little while.
Woody Stone, Executive Managing Director of Operations, Cushman & Wakefield, Multifamily Asset Management, Americas, thinks concessions should remain elevated in core urban product for much of 2021. “The pandemic has placed added pressure on Class A assets,” he says. “As a result, new construction lease-ups have increased concessions, even in the suburban markets.”
FPI Management isn’t dealing with concessions in every market. Still, Vanessa Siebern, CPM, Senior Vice President at FPI Management, says they have increased when new supply is introduced into a market. “The stabilized sites will have to offer more to get prospects in the door to live in their communities in order to compete with the brand-new buildings that need heads on beds,” she says.
But competing with widespread concessions isn’t universal. As a result of the pandemic, Tim Hermeling, Executive Vice President of Marketing at Cortland, says his company saw a small increase in concessions in 2020.
Others are feeling even less of an impact from concessions. Greg Williams, Senior Regional Vice President of Fogelman Properties, which has a heavy presence in the Southeast, has not seen significant increases in apartment discounts in 2020 and does not expect that to change in 2021.
Like Siebern, Williams says the concessions he does see are in buildings that compete with new construction.
“Where we have seen and should continue to see the strongest need for concessions are in submarkets where we find ourselves competing with lease-ups as we have not seen a sustained reduction of new apartment deliveries,” Williams says.
New Types of Concessions?
When concessions are needed, some companies are handling them differently than they did a decade ago.
Bozzuto offers a resident rewards program that it has been able to leverage for resident incentives. With rewards like paying for moving expenses, custom paint and even furniture, apartment operators have many more tools in the shed than they did a decade ago.
“Gift cards have been a hot incentive in some of the markets,” says JoLynn Scotch, Managing Director of Operations at Bozzuto Management Company. “We’re trying to stay away from rent reduction versus a true incentive for quick movement.”
But Hallsey says the concessions process or incentives haven’t changed for him since the Global Financial Crisis. “During my years of experience, I found that perks not documented in the rent roll led to a lot of bad things,” he says. “Once again, that is only from my experience, and I am not saying others are wrong.”
An End in Sight?
While Stone sees elevated concessions in some urban markets, he admits that things could turn quickly. “Once a vaccine is widely deployed, it is possible that concessions can be quickly eliminated as each individual market allows,” Stone says. “Lowering rents, however, may take a couple of lease cycles.”
Hallsey is a little more optimistic about when things may improve. “I believe we have hit the bottom or are very close to the bottom, and concessions will decrease over the next two quarters,” Hallsey says.
Through the first quarter of 2021, Hermeling expects to see concessions continue in pockets of specific markets, like Houston and Austin.
“However, when looking at 2021 comprehensively, we do not expect to see an increase in concessions,” Hermeling says. “They may be needed at certain locations hardest hit by the pandemic to aid in recovery, but we do not anticipate the need for blanket concessions across markets.”
Les Shaver is a freelance writer.
Operators are using new data to inform decision-making, enhance ROI and better position their associates to succeed in a rapidly changing world.
As technology evolves, so too do the metrics the rental housing industry uses to measure performance. The market already was already undergoing high-speed advancement, but when COVID-19 hit, the evolution of performance metrics kicked into overdrive. As the industry assesses conditions during the pandemic, some of the pre-existing metrics have continued to empower sound decision-making, but a new set also has emerged.
During “The Evolution of Performance Metrics” session at this NAA’s APTvirtual, panelists discussed some of the new data operators are using to make smart decisions, maximize ROI and better ensure success amid the global health crisis.
Virginia Love, Industry Principal at Entrata, said that one of the benefits of performance metrics is that they have given operators great direction, before, during and after the pandemic.
“Our teams have really stepped up to the plate when it comes to taking an unforeseen situation and using data to guide their decisions,” Love said.
It’s true that the most frequently used metrics such as occupancy, delinquency trade-out percentages and customer satisfaction haven’t changed much over time. But after the pandemic hit, operators also started to focus on internal metrics including employee satisfaction, retention and employee referrals.
Emphasis on Training
Having this data is one thing; making it accessible and actionable for onsite teams is another. Training is a fundamental component in ensuring that all associates understand where the data is housed and what each metric means.
“The key to any data is the training around it,” said Joe Coleman, Chief Operating Officer of Decron Properties. “Teams need to understand the ‘why’ and the business plan for the property. They need to understand what the business goals are, not just for this year, but in future years, so they can look at the data and understand where the action should be.
“There’s a big movement toward empowerment. We are really training our team members on how to be leaders and make informed decisions and not be afraid to make those decisions. So, by empowering them and providing them with the data, they can make those decisions and streamline the process,” Coleman said.
Changing Marketing Metrics
As new technology evolves and undergoes further enhancement, it allows operators to view more layers along the customer journey, creating a better understanding of how to market to customers. Ryan Perez, Vice President of Marketing at CF Real Estate, discussed how marketing metrics have changed over time and how marketers need to continually evaluate the metrics they use.
“A few years ago, multi-touch attribution was new, and that became a consideration of how we look at the data and their journey much differently,” she said. “What’s important is that we look at every angle and how we can help our customers through their journey and make it an easy and seamless process from the point at which they land on the site, through their experience, virtual or in person.”
One thing that has significantly changed since having to operate through the COVID-19 pandemic is the customer lifecycle. Almost all prospects are communicating with leasing teams digitally and choosing to tour virtually in some capacity. This has left marketers with a wish list of new metrics.
“I would like to measure the overall engagement,” Perez said. “Right now, our platforms can measure an engagement score based on an algorithm, but you can trick that score in a sense as long as you engage within certain parameters. But true engagement and attention, did they get the response they needed, was it accurate and timely? Did they feel they were fostered throughout their journey? We don’t have a metric that really tells us how the prospect feels about their interactions. And now that everything is virtual, it’s even more difficult.”
Good For The Team, Good For The Customer
Now that operators have spent the better part of a year redefining standard operating procedures, they are able to set future-forward performance metrics to measure productivity, the ROI of time spent in meetings and employee happiness.
All panelists agreed that the ultimate strategy for success involves focusing on team members, their morale, their health and safety, understanding what’s going on with them at home and doing what is most helpful to them so they can be productive.
“What is best for our team is even better for our customers,” Coleman said. “We spend a lot of time focusing on the mental health of our teams because then the performance scores take care of themselves. Happy associates yield happy residents.”
Samantha Chalmers is an Account Director for LinnellTaylor Marketing
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.
December's highly-anticipated COVID-19 relief package finally delivers rental assistance while extending the federal eviction moratorium. But how does it affect the apartment industry?
Navigate to a section:
Eviction Moratorium & Rental Assistance
- Extends CDC eviction moratorium through January 31, 2021.
- Provides $25b through September 30, 2022 for rental assistance. The monies will be allocated through the Coronavirus Relief Fund (CRF), administered by the Department of Treasury.
- Allocation and distribution to grantees:
- States allocation will be based on population, no state will receive less than $200 million.
- Eligible grantees are defined as:
- A State; or
- A unit of local government, such as a county, municipality, town, township, village, parish, borough, or other unit of general government below the State level with a population that exceeds 200,000; or
- An Indian tribe or its tribally designated housing entity; or
- The Department of Hawaiian Homelands.
- Program requirements:
- Not less than 90 percent of the funds are to be used for current rent payments, rent arrears, utility payments and other pandemic-related housing expenses. Assistance can be provided for up to 12 months with an additional 3 months of assistance "if needed to ensure housing stability".
To the extent that applicants have rental arrears, grantees may not make commitments for prospective rent payments unless they have also provided assistance to reduce an eligible household’s rental arrears.
Eligible grantees may use up to 10 percent of allocated funding for housing stability services, including case management and other services intended to keep households stably housed.
- Eligible households are those:
- With a household income below 80 percent of area median income (AMI);
- With a demonstrable risk of experiencing homelessness or housing instability; and
- Have one or more household members who qualify for unemployment benefits or experienced financial hardship due, directly or indirectly, to the pandemic.
- States should prioritize families with incomes below 50% of area median income (but no set percentage of funds distributed is required), as well as renter households who are currently unemployed and have been unemployed for 90 days.
- Income Eligibility is based on time of application and must be re-certified every three months.
- The application process requires renters to apply for assistance from their administrative agency managing the program. Payments are sent directly to the housing provider.
- Housing providers can also apply for rental assistance on behalf of the resident but must inform them and secure their consent.
- Residents may receive payment directly from the administrative agency and pay their provider if that provider does not want to participate in the program.
- NOTE: The bill puts loose parameters on state and local grantees as they craft or refine their rental assistance programs. Ultimately, eligibility requirements are at the discretion of grantees.
- Not less than 90 percent of the funds are to be used for current rent payments, rent arrears, utility payments and other pandemic-related housing expenses. Assistance can be provided for up to 12 months with an additional 3 months of assistance "if needed to ensure housing stability".
- Rental assistance will not be included in recipient’s income for federal tax purposes.
- $6,500,000 has been allocated to the Inspector General of the Department of Treasury to conduct monitoring and oversight of the receipt, disbursement, and use of funds.
State and Local Funding
- Extend by one year (until Dec. 31, 2021) the availability of funds provided to states and localities by the Coronavirus Relief Fund in the CARES Act.
- $21,777,439,000 for tenant-based rental assistance to remain available until expended, in addition to the $4,000,000,000 previously appropriated.
- $23,080,000,000 for expiring Section 8 tenant-based annual contributions contracts, including renewals of enhanced vouchers and other special purpose incremental vouchers.
- Up to $110,000,000 to be available for:
- Adjustments in the allocations for PHAs, after application for an adjustment by a PHA that experienced a significant increase in renewal costs of vouchers resulting from unforeseen circumstances; or
- Vouchers that were not in use during the previous 12-month period; or
- An adjustment for funding obligations not yet expended in the previous calendar year for a MTW-eligible activity to develop affordable housing for an agency added to the MTW demonstration; or
- Adjustment costs associated with VASH vouchers; or
- PHAs that despite taking reasonable cost saving measures would otherwise be required to terminate rental assistance for families as a result of insufficient funding; or
- Adjustments in the allocations for PHAs that:
- Are leasing a lower-than-average percentage of their authorized vouchers;
- Have low amounts of budget authority in their net restricted accounts and HUD-held programmatic reserves; and
- Are not participating in the MTW demonstration.
- PHAs that have experienced increased costs or loss of units in an area for which the President declared a disaster.
- $116,000,000 shall be for Section 8 rental assistance for:
- Relocation and replacement of housing units that are demolished or disposed;
- Conversion of section 23 projects to assistance under Section 8;
- The family unification program;
- Relocation of witnesses (including victims of violent crimes) in connection with efforts to combat crime in public and assisted housing;
- Enhanced vouchers;
- Choice Neighborhood vouchers;
- Mandatory and voluntary conversions;
- Tenant protection assistance including replacement and relocation assistance;
- Project-based assistance to prevent the displacement of unassisted elderly tenants currently residing in Section 202.
- At least $5,000,000 to be available to provide tenant protection assistance to residents residing in low vacancy areas and who may have to pay rents greater than 30% of household income, as a result of:
- The maturity of a HUD-insured, HUD-held or Section 202 loan that requires the permission of the Secretary prior to loan prepayment;
- The expiration of a rental assistance contract for which the tenants are not eligible for enhanced voucher or tenant protection assistance under existing law; or
- The expiration of affordability restrictions accompanying a mortgage or preservation program administered by the Secretary.
- $2,158,000,000 shall be for administrative and other expenses of PHAs in administering the Section 8 tenant-based rental assistance program, of which $30,000,000 shall be available for allocation to PHAs that need additional funds to administer their Section 8 programs.
- This includes fees associated with Section 8 tenant protection rental assistance, administration of disaster related vouchers, VASH vouchers, and other special purpose incremental vouchers.
- No less than $2,129,000,000 of the amount provided shall be allocated to PHAs for the 2021 calendar year funding cycle.
- $314,000,000 for the renewal of tenant-based assistance contracts under Section 811 of the Cranston-Gonzalez National Affordable Housing Act.
- Up to $5,000,000 for rental assistance and associated administrative fees for Tribal HUD-VASH.
- $40,000,000 for incremental rental voucher assistance through a supported housing program administered in conjunction with the Department of Veteran Affairs, i.e. VASH.
- $25,000,000 for the family unification program:
- $5,000,000 for new incremental voucher assistance;
- $20,000,000 for new incremental voucher assistance to assist eligible youth.
- $43,439,000 for incremental rental voucher assistance for use by individuals and families who are homeless; at risk of homelessness; fleeing or attempting to flee domestic violence, dating violence, sexual assault, or stalking; and veterans and families that include a veteran family member.
Public Housing Fund
- $7,806,000,000 for the operation and management of public housing, to remain available until September 30, 2024. Of note:
- $4,839,000,000 for 2021 payments;
- $25,000,000 for need-based application process to PHAs that experience, or are at risk of, financial shortfalls;
- $2,765,000,000 allocated pursuant to the Capital Fund formula;
- $75,000,000 for grants to PHAs for emergency capital needs, of which:
- $45,000,000 for PHAs under administrative and judicial receivership or under the control of a Federal monitor;
- No less than $10,000,000 for safety and security measures.
- $35,000,000 for competitive grants to PHAs for activities authorized under the Healthy Homes Initiative, which includes research, studies, testing, and demonstration efforts, including education and outreach concerning mold, radon, carbon monoxide poisoning, and other housing-related diseases and hazards.
- $15,000,000 to support the costs of administrative and judicial receiverships.
Choice Neighborhood Initiative
- $200,000,000 for competitive grants for the transformation, rehabilitation, and replacement of housing needs of both public and HUD-assisted housing and to transform neighborhoods of poverty into functioning, sustainable mixed income neighborhoods with appropriate services, schools, public assets, transportation and access to jobs. This funding is to remain available until September 30, 2023.
- No less than $100,000,000 shall be awarded to PHAs.
- $155,000,000 for activities and assistance related to Self-Sufficiency Programs, to remain available until September 30, 2024.
Native American Programs
- $825,000,000 for activities and assistance authorized under title 1 of the Native American Housing Assistance and Self-Determination Act of 1996, to remain available until September 30, 2025.
Indian Housing Loan Guarantee Funding Program Account
- $1,500,000 for the cost of guaranteed loans, until expended.
Native Hawaiian Housing Block Grant
- $2,000,000 for the Native Hawaiian Housing Block Grant program, to remain available until September 30, 2025
- $430,000,000 for carrying out the HOPWA program, to remain available until September 30, 2022.
Community Development Fund
- $3,475,000,000 for carrying out the CDBG program, to remain available until September 30, 2023.
HOME Investment Partnership Program
- $1,350,000,000 to remain available until September 30, 2024.
Homeless Assistance Grants
- $3,000,000,000 for assistance under title IV of the McKinney-Vento Homeless Assistance Act, to remain available until September 30, 2023.
- No less than $290,000,000 for the ESG Program.
- No less than $2,569,000,000 for the CoC Program.
- Up to $52,000,000 for grants for rapid re-housing projects and supportive service projects providing coordinated entry, and for eligible activities the Secretary determines to be critical in order to assist survivors of domestic violence, dating violence, sexual violence, or stalking.
- Up to $7,000,000 for the national homeless data analysis project.
- Up to $82,000,000 to implement projects to demonstrate a competitive approach to servicing homes youth, age 24 and under.
Project-Based Rental Assistance
- $13,065,000,000 for activities and assistance for provision of project-based subsidy contracts, to remain available until expended, in addition to the $400,000,000 previously appropriated.
- The amounts made available under this section shall be used for:
- Expiring or terminating Section 8 project-based subsidy contracts;
- Amendments to Section 8 project-based subsidy contracts;
- Contracts entered into pursuant to the McKinney-Vento Homeless Assistance Act;
- Renewal of Section 8 contracts for units in projects that are subject to approved plans of action under the Emergency Low Income Housing Preservation Act of 1987 or the Low-Income Housing Preservation and Resident Homeownership Act of 1990;
- Administrative and other expenses associated with project-based activities and assistance.
- No more than $350,000,000 shall be for performance-based contract administrators for Section 8 project-based assistance.
- The amounts made available under this section shall be used for:
Housing for the Elderly
- $855,000,000 for capital advances, including amendments to capital advance contracts, for housing for the elderly; project-rental assistance for the elderly; and for supportive services associated with the housing, to remain available until September 30, 2024.
Housing for Persons with Disabilities
- $227,000,000 for capital advances, including amendments to capital advance contracts for supportive housing for persons with disabilities; for project rental assistance for supportive housing for persons with disabilities, including amendments to contracts for such assistance for up to a 1-year term; for project rental assistance to State housing finance agencies and other appropriate entities; and for supportive services. The funding will remain available until September 30, 2024.
Housing Counseling Assistance
- $57,500,000 for contracts, grants, and other assistance excluding loans, to remain available until September 30, 2022.
- Funds shall be used for providing counseling and advice to tenants and homeowners, with respect to property maintenance, financial management or literacy, and other matters to assist them in improving their housing conditions, meeting their financial needs, and fulfilling the responsibilities of tenancy or homeownership.
- $20,000,000 to remain available until September 30, 2023 for competitive grants to nonprofits or governmental entities to provide legal assistance (including assistance related to pretrial activities, trial activities, post-trial activities and alternative dispute resolution) at no cost to eligible low-income tenants at risk or subject to eviction.
- The Secretary shall give preference to applicants that include a marketing strategy for residents of areas with high rates of eviction; have experience providing no-cost legal assistance to low-income individuals, including those with limited English proficiency or disabilities; and have sufficient capacity to administer such assistance.
- Eligible tenants living in rural areas who receive legal assistance with grant funds shall not be less than the overall proportion of eligible tenants who live in rural areas.
Policy Development Research
- $105,000,000 for contracts, grants, and necessary expenses of programs of research and studies relating to housing and urban problems, as well as technical assistance. This funding is to remain available until September 30, 2022.
Fair Housing Activities
- $72,555,000 for contracts, grants, and other assistance, to remain available until September 30, 2022.
- The Secretary may assess and collect fees to cover the costs of the Fair Housing Training Academy and may use the funds to develop online courses and provide training.
- $350,000 shall be available for the creation and promotion of translated materials and other programs that support the assistance of persons with limited English proficiency in utilizing the services provided by HUD.
Lead Hazard Reduction
- $360,000,000 for the Lead Hazard Reduction Program, to remain available until September 30, 2023, of which $60,000,000 shall be for the Healthy Homes Initiative. This shall include research, studies, testing, and demonstration efforts, including education and outreach concerning lead-based paint poisoning and other housing-related diseases and hazards.
Carbon Monoxide Alarms in Federally Assisted Housing
- Tenant-based assistance, project-based assistance, public housing, Section 811, Housing Opportunities for Persons with AIDS, and rural housing are required to install carbon monoxide alarms or detectors in the dwelling unit in a manner that:
- Meets or exceeds the standards described in chapters 9 and 11 of the 2018 publication of the International Fire Code; or
- Any other standards as may be adopted by the Secretary of HUD, including any relevant updates to the International Fire Code, through a notice published in the Federal Register.
Paycheck Protection Program
- Appropriates $284.45 billion for PPP loans and $20 billion for EIDL Grants.
- Nearly $1 trillion has been allocated to the PPP since April, assisting more than 5 million businesses.
- Creates a Second Draw PPP that allows businesses to apply for a second forgivable loan of up to $2 million. Businesses must have 300 employees or fewer (or meets alternative SBA size standards) and experienced at least a 25% drop in gross receipts in 2020 as compared to 2019.
- A business may receive a maximum loan (for both first- and second-draw PPP loans) of $10 million within 90 days.
- Multifamily family firms remain largely excluded from the PPP under 13 CFR § 120.110 of the Small Business Administration’s lending statutes
- PPP borrowers who receive $150,000 or less in PPP loan money may submit a one-page forgiveness form online certifying their compliance with the program requirements.
- Extends the deadline for PPP “covered periods” in which a borrower may use loan proceeds through September 30, 2021.
- Expands qualified expenses to include the purchasing of PPE for employees;
- 501(c)(6) organizations are granted access to PPP funds if they have 300 employees or fewer, do not receive more than 15% of their receipts from lobbying activities and lobbying activities do not comprise more than 15% of their activities, and the cost of the lobbying activities of the organization did not exceed $1,000,000 during the most recent tax year.
- PPP funds cannot be used for lobbying activities of any kind.
- Repeals the requirement that borrowers who receive both an EIDL advance grant and a PPP loan deduct the forgiven amount of the EIDL grant from the forgivable amount of their PPP loan.
PPP Tax Forgiveness
- Allows for deductibility of business expenses paid for with forgiven PPP loans.
- Provides $7 billion for broadband internet access: $285 million for connecting minority communities.
- $3.2 Billion for an Emergency Broadband Benefit for Low-Income Americans.
- $300 Million to Promote Broadband Expansion to Unserved Americans.
- $65 Million for the development of new, more accurate, and more granular broadband maps Tax Provisions (related to COVID).
- Low-income Housing Tax Credit (LIHTC) is modified by the creation of a permanent, 4% floor for LIHTC that is generally used for the rehabilitation and renovation of affordable housing.
- There are two credits available under the LIHTC program.
- One is the 9% credit used for new construction.
- The second is the 4% credit, which is typically used for rehabilitation of older rental housing and the preservation of subsidized rental developments (in conjunction with tax-exempt bond financing).
- There are two credits available under the LIHTC program.
- An additional LIHTC allocation for disaster zones increases a State’s LIHTC allocation in 2021 by $3.50 per resident of a qualifying disaster zone. The allocation can carry over to 2022. Qualifying disasters are those designated by the President between 1/1/20 and 60 days after enactment, but do not include the nationwide COVID-19 disaster declaration.
- The Employee Retention Tax Credit is modified by:
- Increasing the credit rate from 50% to 70% of qualified wages.
- The eligibility is expanded by reducing the year-over-year gross receipts decline from 50% to 20%.
- Increasing the limit on per-employee creditable wages from $10K per year to $10K per quarter.
- Increasing the 100-employee delineation to 500 or fewer employees. o Allowing businesses with PPP loans to qualify.
- Extending the credit through June 30, 2021.
- Extends payroll tax credits for paid sick and family leave enacted in the Families First Coronavirus Response Act through March 31, 2021.
- Provides for the tax deduction of 100% of business meals (up from 50%) for 2021 and 2022.
- Corrects a technical problem in depreciating residential rental housing – under certain circumstances, some real estate businesses were forced to depreciate residential rental housing over 40 years instead of 30 if they elected out of a limitation of interest deductibility under the Tax Cuts and Jobs Act. The recovery period is corrected to 30 years in the Act.
Tax Extender Provisions
- The exclusion from income for mortgage debt forgiveness is extended for five years (through 2025), but the maximum amount is reduced from $2 million to $750,000.
- The energy-efficient commercial buildings deduction is extended permanently, its efficiency standards are updated, and the deduction rates are indexed for inflation.
- The energy investment tax credit for solar and residential energy-efficient property tax credit is extended for two years (through 2023).
- The mortgage insurance premium deduction is extended for one year (through 2021).
- The energy efficient homes credit is extended for one year (through 2021).
- The nonbusiness energy tax credit (for qualified energy efficiency improvements) is extended for one year (through 2021).
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.
Apartment companies think outside the box to protect staff from COVID-19.
By Bendix Anderson
Apartments companies across the U.S. have worked hard to keep residents safe during the COVID-19 pandemic. But they have been just as focused on protecting employees—even as growing business activity brings their leasing professionals and maintenance teams into contact with residents or prospective residents.
“As the colder seasons approach and the pandemic continues, it will be critical that team members remain vigilant about safety practices,” says Mike Brewer, Chief Operating Officer of the RADCO Companies.
Many apartment companies are now sending staff members back to leasing offices that operated with skeleton crews during the height of the pandemic. Others are beginning to engage with residents in person and sending maintenance crews into apartments to address the backlog of problems that have piled up since the pandemic began.
“Most amenities and leasing offices were closed over the summer,” says Demi Sterling-Kinney, Vice President of Operations at Aspen Heights Partners. “We have since reopened many of these with policies in place that support social distancing.”
Leasing Offices Gradually Reopen
Numerous apartment communities closed their leasing offices to residents and potential residents in the first few months of the pandemic.
“Our existing technology gave us confidence that closing our leasing offices would not unduly interrupt business continuity,” says Brewer. A skeleton crew of property managers still showed up to work behind the closed doors of the leasing offices at RADCO’s communities, he says. They did the basic business of keeping the apartments safe and habitable, communicating with residents through phone, email and the internet.
“We remain closed to the public,” Brewer adds. “We have since returned to fully staffing our leasing offices with appropriate social distancing and personal protective equipment protocols in place.”
Apartment companies typically decide what their staff members can and cannot do by following the regulations set by local health officials to the letter. But some companies have gone beyond what local regulations demand to help keep their staff and residents safe.
“We began taking steps to ensure safe operation nationwide two weeks before the national emergency,” says Patrick Appleby, President of WinnResidential.
Experts now largely agree that COVID-19 often spreads through the air, especially indoors in spaces with weak ventilation where viral particles can hang in the air for as long as three hours. For safety in the pandemic, health experts recommend a tough standard of six to nine air changes per hour in rooms where people gather—at least twice the standard required by many building codes.
Apartment managers also have followed the level of infection increases in their areas. “Our local managers and their teams have followed infection rates closely as well to decide on a property-by-property basis if there were adjustments that needed to be made… in advance of and addition to local regulations,” says Elie Rieder, Founder and CEO of Castle Lanterra Properties.
Leasing Continues Despite COVID
These apartment companies have had to continue to lease new apartments—while keeping their employees safe—during the pandemic. They quickly learned how to conduct as much business as possible through the internet.
“Virtual or contactless leasing techniques will be an important option for everyone for the foreseeable future,” says Appleby. They include virtual tours and online applications. Many companies are also experimenting with self-guided tours.
Some companies had already planned to allow potential renters to lease an apartment largely online. The pandemic simply sped up their plans. “RADCO moved to 100 percent virtual or video conference-style leasing within days of pandemic-related closures,” says Brewer. The company hired its first digital leasing consultant two years ago, when the company first included virtual leasing tools in its technology innovation road map.
A virtual tour can be as simple as a video posted to an apartment community’s website. More complex virtual tours allow website visitors to explore a three-dimensional apartment model, similar to the three-dimensional environment of a computer game.
Apartment companies are also using “smart apartment” technologies like electronic door locks and online ID verification to let potential renters arrange a tour of an apartment through the community website and enter the apartment without ever seeing a leasing agent.
These technologies are likely to be important for apartment companies long after the pandemic is over. “Self-guided tours of apartments will become a more significant part of the sales process,” says Castle Lanterra’s Rieder.
Potential renters seem to have already gotten used to the new process. “Once our teams were past the initial learning curve, our same-store leasing and occupancy statistics began outpacing prior-year results,” says RADCO’s Brewer. “Consumer acceptance of virtual leasing signals that this is a trend that will continue.”
Virtual leasing tools will also give property managers more time to provide residents with new kinds of services. “In the near future, as technology takes more of the administrative burden away from frontline staff, we expect resident service menu to expand,” says RADCO’s Brewer.
Virtual leasing is also an important option for cautious potential renters. “There is a lingering reluctance for in-person leasing in the hard-hit markets, with a great deal of enthusiasm for virtual leasing techniques,” says Appleby. “Our priority through year-end is wooing reluctant consumers back into the leasing market.”
Maintenance Workers Take Extra Care
In the first months of the pandemic, many apartment companies sharply limited how often they would send maintenance teams into apartments to make repairs.
Spending a significant amount of time in someone’s home—long enough to fix a sink, for example—could be one of the riskiest things a person could do during a pandemic, if the resident happened to be infected with the coronavirus and the worker didn’t have access to the right protective gear.
“We limited in-unit work orders to emergencies only,” says Winn’s Appleby. More recently, Winn’s maintenance teams have been more productive—with the proper protective gear. “Our maintenance teams are at full strength, working hard to catch up on work orders and capital projects,” he says. “We have asked them to maintain the same vigilance about safety even as conditions have improved.”
These same issues have made it difficult to complete inspections. “RADCO had several properties in due diligence during the pandemic,” says Brewer. “That typically includes access to occupied units for inspection,” says Brewer. “Navigating the competing demands of buyers, sellers and residents requires open-minded collaboration.”
Some of the same technologies that have made contactless leasing possible—including simple video calls—were also helpful for some inspections during the height of the pandemic.
“The reliance on and performance of virtual tools has been incredible for inspections,” says Rieder of Castle Lanterra.
The Future of Work in Apartment Communities
Many apartment companies also shut down their corporate offices, sending workers home to work with their colleagues through email and video calls.
These companies have adopted new tools to help employees stay productive. “Our monthly virtual town halls have been exceptionally well-attended,” says Rieder. The company-wide intranet Castle Lanterra created in March, she adds, also continues to serve as an effective clearinghouse for the sharing of knowledge and techniques among employees.
Most of these companies expect to have staff eventually return to the office. “I am surprised by the growing expectation that companies will completely capitulate to a work-from-home model,” says RADCO’s Brewer. “I expect to see a new hybrid operations model, but not a full-blown forfeiture of the traditional in-office experience.”
In particular, Brewer looks forward to joining meetings in person. “The biggest lesson is that ‘Zoom fatigue’ is a real thing,” he says. “In-person meetings are 10 times more valuable in terms of moving the business forward.”
Bendix Anderson is a freelance writer.