Inside Baltimore’s Solid Multifamily Market
Bozzuto Management Co.’s Isabelle Mattioli and Patrick Butler discuss market dynamics and expectations for the region.
Thanks to healthy economic fundamentals in the pre-pandemic era, Baltimore was able to withstand the challenges brought on by the coronavirus outbreak. Following a 9.2 percent spike in May 2020, the metro’s unemployment rate dropped to 5.5 percent in May 2021, 20 basis points below the national figure, according to preliminary data from the U.S. Bureau of Labor Statistics.
Baltimore’s multifamily market is also improving quickly, reaching healthy levels of occupancy and maintaining steady rent growth in recent quarters. Bozzuto’s management arm oversees operations for more than 50 properties in the Baltimore area, so we asked Regional Vice Presidents Isabelle Mattioli and Patrick Butler to evaluate the metro’s rental market and discuss what’s ahead.
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How would you describe Baltimore’s multifamily landscape more than one year into the pandemic?
Mattioli: Baltimore started to see a rebound in occupancy in the fourth quarter of 2020, which enabled us to push rents at the beginning of 2021. In the past 90 days, occupancy has stabilized and we are seeing positive rent trade-outs on new leases. The majority of lease-ups that were projected to stabilize in 2020 are now stabilizing in mid-2021, resulting in a reduction of concessions offered.
For example, Liberty Harbor East—located in the center of the dynamic Harbor East neighborhood—reached stabilization in June 2021. Along with our partner Harbor East Management Group, we envisioned Liberty as a testament to Baltimore’s history and local culture, and community response is indicative of the strength of this rental market.
Which Baltimore areas fared better over the past 12 months?
Butler: Occupancy-wise, the properties close to the University of Maryland and Johns Hopkins Medical institutions fared better than other neighborhoods that did not have a strong medical presence. As far as rents were concerned, all neighborhoods felt financial impacts as demand decreased and concessions increased to maintain occupancy.
What sets Baltimore apart from other Mid-Atlantic markets?
Mattioli: Baltimore is known for world-renowned medical and educational institutions, specifically the University of Maryland and Johns Hopkins, which comprise a majority of the demographic in our communities. Throughout the pandemic, we saw an increase in our medical demographic driven by hiring surges from these institutions.
One missing piece in 2020 was the national and international students who weren’t attending school on campus. As that demographic returns, it will only further bolster occupancy gains and rent growth.
What can you tell us about the supply/demand dynamics?
Butler: Currently, demand is outpacing supply and concessions are decreasing, enabling sites to push rents. The current pipeline is below the historic highs of 2017 and 2019.
Mattioli: Baltimore is in line with the rest of the major metro areas. Rising construction costs are impacting all new construction.
How has the health crisis impacted Bozzuto’s multifamily portfolio and operations in Baltimore?
Butler: With the ongoing threat of COVID-19, resident concerns and expectations required us to accelerate and adjust to a new way of getting in front of our customers.
As the pandemic began in early 2020, we were able to seamlessly transition management and leasing of 80,000 units into virtual operations. We had to adapt quickly to bring everything online with all-virtual touring and leasing, and encouraging residents to use our online portals to handle everything from maintenance requests to rent payments.
Cleanliness and attention to detail became much more important to residents during the pandemic. We worked to foster an environment of trust by implementing higher standards of cleanliness through our Welcome Home Commitment, a meticulous cleaning and detailing process guided by a 70-item checklist. Knowing that their apartment home will be thoroughly cleaned and detailed, inspected and sealed, provides our residents with tremendous peace of mind.
How have your business and management strategies changed over the past year? Tell us about rent collection across your portfolio since April 2020.
Mattioli: We adjusted to the COVID-19 landscape, but our overall business strategy has stayed consistent with a focus on resident and employee satisfaction. At Bozzuto, our mission is to create a sanctuary.
Butler: The majority of our demographics were not in industries affected by COVID-19 and average delinquency ran around 2 percent to 3 percent.
How do you make sure your apartment communities are appealing to potential renters during a pandemic?
Mattioli: Our online presence has and will continue to be a focus as we emerge from the pandemic. Responsiveness and proactive communication are key to retaining existing residents.
What’s next for the Baltimore rental market?
Butler: Baltimore has experienced historic levels of supply over the last 5 years. With the supply lessening in the coming years and demand holding strong, Baltimore will continue to see strong occupancy and rent growth.