Underpinned by a diverse economy and a relatively affordable cost of living, Richmond, Va., has shown resilience since the onset of the public health crisis. Multifamily continues to be the preferred segment for investors as overall fundamentals have remained strong throughout COVID-19, according to Colliers research. Rental rates increased by roughly 5 percent over the past 12 months and the trend is anticipated to endure, Barry Tomlin, vice president of Breeden Property Management, told Multi-Housing News.
The Breeden Co.’s multifamily portfolio currently encompasses apartments in excess of 15,000 across Virginia, with more underway. The Ella, for example, is a 250-unit project in the highly coveted Scott’s Addition area, which Breeden is building in a partnership with Spy Rock Real Estate Group. Moreover, in April, Breeden intends to break ground on the second phase of The Village at Westlake, a 122-unit development in the western part of the metro.
In the interview below, Tomlin discusses the strengths of the Richmond multifamily market and reveals his business strategy for the spring and summer leasing seasons.
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How has the Richmond multifamily market performed in the past 12 months?
Tomlin: The Richmond multifamily market has performed well and continues to perform well through the first quarter of 2021. While the Richmond area was also affected by COVID-19—with the loss of more than 45,000 jobs—the occupancy rates have remained high, with average occupancies between 95 percent and 97 percent.
Demand for units has exceeded what is currently available in the market. We have also seen rental rates increase by 4 percent to 5 percent over the past 12 months and are anticipating the trend will continue, if not slightly improve, as we move into the spring and summer leasing seasons.
Please give us a few details about rent collections across your portfolio in 2020, compared to the prior year.
Tomlin: Overall, delinquency slightly improved in 2020. This was primarily due to our proactive approach at the beginning of the pandemic to offer payment plan arrangements for all residents that were negatively impacted by COVID-19. Additionally, our office staff proactively supported any resident needing assistance with completing rental assistance program applications. By taking these steps, we were able to assist many residents with staying in their homes and not falling behind in rental payments.
How has the pandemic changed the way you deal with prospects?
Tomlin: With our leasing offices closed to the public during the first few months of the pandemic, we adopted several new options for our prospects to interact with our leasing teams. We were already utilizing online applications for prospects to apply, but we also began utilizing virtual tours, as well as self-guided tours, which allowed prospects to tour units with limited face-to-face contact with our on-site staff. Our leasing staff also utilizes FaceTime to tour our properties, giving the prospects the opportunity to have real-time conversations with the leasing agent and ask questions.
What has been the most difficult thing about managing your properties over the past 12 months?
Tomlin: The biggest challenge for The Breeden Co. over the past 12 months has been ensuring that all safety protocols are in place to help mitigate any opportunity for our employees or residents to be exposed to COVID-19. At the onset of the pandemic, we made very difficult decisions to temporarily close our amenity spaces such as fitness centers, playgrounds and pools to help limit potential exposure. We also temporarily closed our leasing centers to the public. Additional sanitizing protocols were implemented, and we ordered and continue to maintain adequate supplies of personal protective equipment.
How do you expect the spring leasing season to be impacted by the ongoing economic crisis?
Tomlin: Typically, spring and summer months are the busiest times of the year in our industry, with schools closing for the summer. People tend to schedule their moves around the school year calendar. We have experienced record-high occupancy levels over the past 12 months. I believe our residents have seen and experienced how we as a company have handled keeping our properties maintained and kept an open line of communication with them throughout this pandemic, and most have no intention of moving out anytime soon. We are seeing renewal rates at 85 percent to 95 percent across our portfolio.
Which areas of the metro are the most coveted nowadays and why?
Tomlin: The Scott’s Addition area is generating a lot of attention these days. It has been deemed one of the fastest-growing areas in the city of Richmond. There is a big draw for multifamily developers like us, due to the large number of breweries, cideries, distilleries, restaurants, bars and retail shops—a big draw to the Millennial generation as well as working professionals that are relocating to the downtown area. Scott’s Addition is also very convenient to interstates 64, 95 and 195, giving easy access in and out of the city.
What makes Richmond a good market for multifamily investments?
Tomlin: There are several universities throughout the Richmond area, which is a draw for both in-state and out-of-state students, while also creating many jobs for faculty and staff. Richmond offers a relatively affordable cost of living, which is appealing to many Millennials. The Richmond area is also a very business-friendly market, as seen by the influx of new businesses and growth in the area.
What are your predictions for the Richmond multifamily market going forward?
Tomlin: While I am not an economist, in today’s economic environment, predictions are difficult to make. However, based on The Breeden Co.’s overall success in the operations of our company’s multifamily division, as well as the continued expansion and growth in The Breeden Co. construction division, Breeden Construction, over the past year, I do not anticipate any drastic variations in the market that would impede further growth and expansion.