In many areas of the country, concessions are back.
One byproduct of the apartment industry’s decade-long run of success has been that there is an entire generation of onsite staffers who have never worked in an environment where rents are falling.
But COVID-19 has changed things dramatically. In many areas of the country, concessions are back. Skyrocketing unemployment numbers make it even harder for apartment operators to know who will and won’t pay rent.
“The reemergence of concessions in a broad way makes pricing within a submarket more difficult, as net pricing moves on a daily basis are widening,” Bridge Property Management COO Tim Reardon told Multi-Housing News’ Diana Mosher. “The understanding that availability is currently hazy—based on the potential of many nonpaying residents moving out at once—makes pricing decisions more difficult.”
Reardon thinks pricing and revenue management systems are essential during this current recession. He told Mosher that these systems could keep operators from reacting too emotionally and potentially giving up revenue. The company continually fine tunes its pricing and revenue management best practices and is now including eviction risk of a property’s resident base into its pricing model.
Even with revenue management, Reardon knows that eviction policy will play a significant role in the Bridge’s success going forward.
“We’ve been pleasantly surprised with the success of our properties over the past few months, but we know the stability we’re experiencing may be running out with the stimulus dollars dwindling,” Reardon told Mosher. “Until the moratorium on evictions ceases, we won’t really know the extent of the impact on the industry, but we’re hoping to be able to find some viable deferral solutions for all of our residents, so we can keep them in place, which would be a win for everyone.”