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PANDEMIC PAIN: Dealing With Packages

October 2020

COVID-19 has buried apartment operators under a mountain of deliveries. 

It’s a problem that just won’t go away for multifamily housing operators: Figuring out how to handle all the packages that come to an apartment building has long been a time-consuming challenge for staff at multifamily apartment communities, only exacerbated by the rise of e-commerce in the last two decades.

Then COVID-19 struck.

With more residents spending more time at home during the pandemic, and fewer venturing out to the store for basic supplies, operators have been faced with a flood of packages that has made every week feel like the holiday rush, turning every day into Parcel Armageddon.

The volume of packages Gates Hudson has been receiving onsite is increasing, says Aaron Almanza, Regional Vice President for the Fairfax, Va.-based company, which operates 22,000 apartments. “At one of our larger properties, with 912 units, we had to add a second full-time concierge whose sole duty is to help with packages.”

Almanza isn’t alone.

“Having packages delivered directly to the leasing offices is no longer a viable option due to the volumes we’re receiving,” says Scott Gilpatrick, Vice President of Operations at Atlanta, Ga.-based Carroll which operates30,000 apartments. “We’ve been repurposing amenity spaces as package rooms.”

And at Chicago-based LaSalle Investment Management, an operator of 17,000 apartments, Senior Vice President Kelly Soljacich says the pandemic and its resulting surge in e-commerce have collided head-on.

“COVID-19 has created a real challenge to keep up with an increasing amount of online purchases during stay-at-home orders,” she says. “We have been seeing double and triple the amount of packages normally received in the summer months.”

Going Postal

Indeed, according to the U.S. Postal Service, package volume increased 50 percent in the second quarter compared with second quarter 2019. At United Parcel Service (UPS), the increase was a smaller 21 percent, but shipments to homes — the most expensive and challenging type of delivery for carriers — was up 65 percent. And both UPS and FedEx announced surcharges this summer for major shippers to help accommodate the crush of packages. 

For apartment operators, finding ways to handle the never-ending stream of deliveries has been a shotgun approach:

  • Package lockers help, but are expensive and eventually face their own volume, space, size and use constraints.
  • Dedicated package rooms have been making a comeback at apartment communities, but they eat up space, need 24/7 access and pose the risk, amid COVID-19, of bringing residents too close together as they get their stuff.
  • White-gloved service by staff who receive packages for residents and then deliver them to individual doors has worked at some companies, but can increase costs or pull staff away fromother tasks.
  • Third-party package drop-off services, which receive parcels at an off-property location and deliver them to residents when they’re home, have become increasingly popular, but carry with them a per-door fee for operators. Apartment execs must decide whether to pass it on to residents during a period of declining rent amounts and increased collection hurdles.

 

“The pandemic has taken an already-confusing situation with packages and just made it more challenging,” says Tim Kramer, Vice President and Director of Operations at Chicago-based Draper and Kramer, which oversees more than 8,000 apartments. “Honestly, we haven’t settled on a single universal solution to package handling, because properties can be so different in what residents are asking for and what we have room for.”

Exterior Package Lockers

For David Lynd, CEO of San Antonio, Texas-based Lynd, which operates 20,000-plus apartments, the packages piling up at his communities also were a problem long before COVID-19 came along. “The offices at a lot of our properties were just starting to look like industrial warehouses because the number of packages was getting so ridiculous,” he says. “They come all day, every day.”

To deal with the onslaught, Lynd decided to outfit his portfolio, which includes assets built anywhere from the 1970s through the 2000s, with package lockers. His challenge was putting the lockers in an area where staff would not have to be present to give residents access.

“The premise with lockers is, you want them to be available to residents 24/7,” Lynd says. “If you have to get into the office area to access the package lockers, what’s the point?”

That ruled out areas behind locked doors, and because many of his communities are garden style, lobbies weren’t always an option either. Where Lynd could install them in an internal common area that allowed round-the-clock access, he did. But where that space wasn’t available, he chose exterior-rated lockers that could stand up to the elements while giving residents access to their packages any time of the day or night.

“We armed all of our communities with package lockers,” Lynd says. “We picked a central location where residents already go, whether it’s the mail kiosk or another area where residents already naturally congregate, and that’s where we put them.”

They didn’t come cheap. Lynd says his interior lockers cost around $22,000, while  exterior-rated units ran between $33,000 and $35,000. Although that amounted to a significant capital expense, the good part was it didn’t eat as heavily into Lynd’s recurring operations budget, which should help him realize more value over time.

But beyond the dollars and sense, Lynd says the lockers basically amount to table stakes, given the current situation in the multifamily housing environment, where operations budgets have increased and rent collection has become more challenging amid COVID-19.

“The coin has rotated,” Lynd says. “Now it’s a race to keep tenants. So while I can’t necessarily quantify a true value-add cost, what I can say is properties that have these lockers are the ones that typically experience higher occupancy and a better renewal rate. And going into the market right now, that’s what you’re looking for.”

Locker Gloom

But for others who have turned to lockers in the past, the units have come with challenges of their own.

For example, while an erstwhile general rule has been that an apartment community should receive about 20 to 25 percent of its apartment count in packages on a daily basis, operators say that metric is now woefully low.

“So if you had a 400-unit community with a capacity to handle 100 packages a day, that was plenty,” says Tim Peterson, Chief Operating Officer at Boca Raton, Fla.-based Altman Companies, which counts 8,000 apartments in operation or under development. “Now, we’re planning a capacity of one to one.”

From his perspective, lockers come with an inherent scaling issue because of the exponential rise in online ordering, both before and since the pandemic began.

“When the idea came out a decade ago, package lockers seemed like such an elegant solution,” says Peterson. “But the explosion of e-commerce means they have essentially become obsolete in a five-year timespan. We’ve come to the conclusion that you really just can’t build enough lockers. It becomes too unwieldy.”

Other problems operators report with lockers is residents not picking up their packages on a timely basis, leaving no room for other packages, which are then left out in the open. That has led some operators to charge daily storage fees for repeat offenders, to the chagrin of residents.

“Once it gets full and people’s packages can’t go into the locker, residents get upset,” Kramer says. “So you’ve basically taken something that should be an amenity and turned it into a detractor.”

Even when there is ample space for incoming parcels, delivery people often don’t sort packages for individual lockers because it adds time onto their already-busy schedules.

“The issue that we’ve found surrounding lockers is that they are really dependent on the delivery people buying in and using them 100 percent of the time,” says Almanza at Gates Hudson. “Delivery personnel will sometimes walk into the fobbed package room with all the lockers right there, and they’ll still just toss the packages on the ground and walk off. That creates a situation where anyone with access can walk in at any time and leave with a package that isn’t theirs.”

Smart Package Rooms: New Twist on an Old-School Approach

Issues with package lockers have led some operators to go back to running package rooms for deliveries, which typically take up less space and, when managed correctly, can avoid a rush of residents all trying to get their packages at once.

At the Altman Companies, Peterson has converted storage spaces that would normally get rented to residents into ad hoc package rooms and hired temporary workers to help residents with their packages. “Longer term, we’re moving from the package locker solution to a package room solution with restricted access and cameras where residents use their fobs to get in,” he says. “So if somebody picks up the wrong package or somebody’s package is not there, we can use a combination of the access logs and the video to figure out where [it] ended up.”

But while so-called smart package rooms have advantages, some point out that they inevitably bring residents into closer contact with one another — an ongoing problem as long as COVID reigns.

"When it comes to self-service package rooms, which are typically small, how do you ensure only one resident goes in at a time?” says Kramer. “If the package room gets full, or if there are issues getting into the room and residents can’t access it, it still requires contact with staff.”

White-Glove or Do-It-Yourself?

To deal with that situation, Draper and Kramer has piloted white-glove, to-the-door package service at some of its communities, while running centralized, staffed package rooms at others, with staggered times for residents to pick up their packages.

“The white-glove package delivery is really only practical at smaller properties,” says Kramer. “At our larger properties, we have centralized package receiving, and we’ve been experimenting with designated pickup times.”

For Mark Segal, Senior Vice President at Glencoe, Ill.-based Optima, which operates luxury high-rise apartment buildings in Chicago and Arizona, taking a white-glove approach has been a labor-intensive, but effective, way of getting packages to residents’ doors. Staffers drop packages outside individual doors on a daily basis.

First, team members, wearing masks and gloves, place the package outside of the apartment home, Segal says. “We [later] do a sweep through the hallways of the community, and if the package isn’t picked up as of a certain time of day by the resident and brought into their home, we return [it to] our storage system.” It’s both a service and an amenity, he adds.

Segal says the system keeps residents from congregating around crowded locker rooms, coming into contact with one another and having to touch other people’s packages. While the service involves staff time and effort, Segal says he’s also realized other benefits from it.

“Beyond the service itself, we have more regular interaction in different areas of the community by our team members,” Segal says. “So they’re experiencing what’s going on, and if they notice anything that could be touched up, for example, along the way, they let the team know. It’s helping us with overall maintenance of the community, because you have more eyes on what’s happening.”

Third-Party Package Delivery Services

Others in the apartment industry, after years of grappling with rising piles of packages at their communities, are now deciding to get out of the package business altogether. Instead, they’re contracting with third-party providers who receive packages offsite, and then interact with residents via an app to schedule a drop-off when they’re home.

“At that point, it becomes nothing more than a pizza delivery,” says Kramer, who has been evaluating these services. “You wouldn’t have it delivered when you’re not home, so there’s no need for us, as the managers, to even get involved in the package- handling process.”

For Larry Goodman, Chief Operating Officer at Addison, Texas-based Pinnacle, which operates 160,000 apartments, third-party services have been a rare bright spot in the situation operator face today.

“COVID has pushed operators to look at alternative delivery options that remove the staff from the equation,” Goodman says. “Looking at those services has really helped during this new time we are living in.”

Still, those services typically come with a price tag of $10 to $15 per door per month, which results in another quandary for operators: Passing that charge onto residents at a time when rentals are decreasing, or eating it themselves as an operating expense to keep their communities full.

While neither approach comes without its own pain points, on balance, operators say taking themselves out of the package delivery stream is a scalable solution for an ever-growing challenge.

“Many operators have tried to solve the challenges with package locker systems, package concierges or self-service package rooms,” says Toni Reeves, Executive Director at Charleston, S.C.-based Greystar, the largest apartment operator in the United States, with approximately 660,000 apartments and student housing beds. “With all these options, our onsite teams are still handling packages, [which takes] up at least two to three hours a

day at any given property. Using a third-party vendor gets us out of the package business.”

For example, Greystar piloted a third-party vendor delivery program at a 490-apartment community in Dallas in 2017. To date, the service has delivered more than 11,000 packages at the building, attaining a 99.2 percent on-time delivery rate while saving more than 1,420 hours of staff time. 

“Just achieving one of those metrics alone would make it compelling,” Reeves says. “All three together mean it’s an easy decision.”

That’s at least one way to tackle a problem that by all accounts will only continue to grow in the months and years to come.  

Joe Bousquin is a freelance writer.