As the COVID-19 battle moves into its second year, a survey of multifamily industry leaders said timely rent payment was the most challenging issue of 2020. Optimism about rent growth and the overall economy dropped to the lowest levels in a decade among respondents in an annual survey by J Turner Research.
Optimism for the national economy for the next 12 months dropped to 3.0, down from 3.7 in 2019 and the lowest outlook since 2010, according to the survey of senior-level and onsite multifamily personnel that began in 2008. The survey from J Turner Research gauges industry leaders’ attitudes and expectations. Questions range from predictions for their portfolios, rent concessions, occupancy, availability of finance, optimism about the U.S. economy and their most challenging concerns.
This year, J Turner Research added a section to understand the impact of COVID-19 on property management. The survey had 1,651 participants. Of those, 70 percent were onsite team members including property managers, assistant managers, leasing consultants and maintenance professionals.
“The answers to questions regarding rent in our 2020 survey reflect the tumultuous and uncertain nature of this year,” Joseph Batdorf, president of J Turner Research, told Multi-Housing News. “COVID-19 has upended the livelihood of many, challenging decades-old management practices in the rental industry. Multifamily companies have spent much of the year balancing timely rent payments, handling eviction moratoriums and maintaining resident expectations. As seen in our survey, respondents have said that 66 percent of their portfolio offer rent concessions, which is the highest in nine years. The general sentiment around rent is in tandem with the pessimism around the national economy, which is the lowest since 2010.”
As Batdorf noted, the survey found 66 percent of portfolios offering rent concessions in 2020—up from only 13 percent in 2019. It was the highest percentage since 2010. The industry leaders said the average value of concessions in their portfolios was: less than $400 (22 percent); $401 to $750 (18 percent); $751 to $1,200 (11 percent) and $1,200 and up (15 percent). The survey found 34 percent of the portfolios were not offering concessions. Rent issues were the top two challenges, according to survey participants.
Fifty-two percent of respondents said timely payment of rent was their biggest challenge in the past year followed by raising rent at 40 percent and hiring/talent management at 30 percent. While many found raising rent a challenge, the effective rent increase for the year was 4.3 percent, slightly higher than 2019, according to participants. Also adding to rent concerns, respondents reported 68 percent of their properties were under local eviction moratoriums.
More than half (51 percent) of the C-level executives indicated cutting capital expenditures from the 2020 capital budgets. Expectations for capital spending in 2021 are mixed with 33 percent of C-level executives indicating their capital budget would be greater than 2020; 30 percent saying it would be less and 37 percent saying it would be the same. In some good news, the respondents reported no impact on the availability of financing.
More COVID-19 Impacts
When the respondents were asked the biggest challenges of coping with COVID-19, there were differences in the answers of onsite personnel and C-level executives. Onsite personnel reported their biggest challenges were managing resident expectations, closing and opening amenities and securing safety equipment. C-level executives cited employee schedule management (work from home, shutdowns etc.), eviction moratoriums/dealing with evictions, adapting to CDC and government pandemic-related guidelines as their biggest challenges.
With a focus on managing COVID-19 safely, multifamily properties have increasingly turned to virtual and self-guided tours. The survey asked respondents to track the percentage of leases resulting from both as well as in-person tours. Overall, in-person tours resulted in 42 percent of leases; virtual tours resulted in 37 percent of leases and self-guided tours, 27 percent.