The last few weeks have been quite the mix of bad and good news with respect to COVID-19. As the virus rages essentially out of control, increasing constraints being reimposed by state and county governments could reduce the pace of recovery and even risk putting us back into negative growth territory. Yet, amid these concerns comes some highly encouraging news about vaccines. 

To summarize, Pfizer announced 95% efficacy and has filed for emergency use authorization with FDA. Moderna announced 94.5% efficacy and is likely to file for emergency authorization any week now. Lastly, AstraZeneca Oxford announced at least 70% efficacy, though possibly up to 90% depending on further trials.  

With these highly encouraging results and numerous other vaccines under development, there appears to be light at the end of the tunnel. However, as we have all heard, there are enormous manufacturing and logistical hurdles ahead of us. So what does this mean for multifamily operators? When are we likely to see the benefit of these treatments accrue to our demand streams?

First, do the math.

There are roughly 330 million Americans, so let's say that 80% of us will need to be vaccinated to consider distribution to be widespread. That means we will need to inoculate 264 million people; since both vaccines require two doses roughly a month apart, we need 528 million doses. Since the Pfizer and Moderna vaccines are domestically produced, we'll limit our analysis to those two.

Public reports indicate that Pfizer might get 20 million doses out in December, which would treat 10 million people. If Moderna can get an additional 10 million doses out, then that means 15 million people would be covered by sometime in January.

The remaining 249 million people will need 548 million doses. Reports suggest that Pfizer intends to manufacture 1 billion doses in 2021, and Moderna plans 500 million. That's a combined ability to inoculate 62.5 million people (125 million doses) a month. That would get all 249 million remaining people in just under four months!

However, we know that manufacturing will have to ramp up and thus won't hit those kinds of numbers for several months. A better estimate might be averaging half to two-thirds of that level for the first half of the ramp-up. That gets us to something more like 6-8 months, meaning the earliest possible date for full penetration is June, with July or August looking more likely.

Several caveats must be considered in this intentionally simplified analysis, including, but not limited to:

• Given the anti-vax sentiments of many, we may not be able to reach 80% penetration.

• There's uncertainty around how long vaccines will confer immunity and thus what the pace of further booster shots will need to be.

• There may be a lag between vaccine penetration and economic pickup. However, since penetration will grow over time, the economy could show signs of improvement ahead of full distribution.

• Any US distribution of the AstraZeneca or yet-to-be-announced vaccines would speed up the timeline.

• We may get to benefits more quickly if younger children turn out not to need vaccines as urgently as adults.

What it could mean for multifamily

So what does this mean we should do? Given that we'll be lucky to begin to feel the vaccine's benefits by late second quarter and probably more like mid-third quarter, that means we have at least six more challenging months, the first few of which are our low season.

• Maintain an "occupancy defender" strategy for at least the next three months. If you don't know exactly how to configure your revenue management system (RMS). 

• Despite that approach, be on the lookout for opportunities to push rents. Not all markets and submarkets are behaving the same, and we continue to see operators missing opportunities out of fear or lack of proper strategy.

• Determine the criteria and standards you will use to identify when to change back to a more normal balanced growth strategy. The start of this crisis was quite crisp and clear; however, the exit will be much more gradual and likely to vary by market and property class. Humans are not particularly good at noticing the tipping point in a gradual change, so plan ahead and use data to determine that point.

• Get a handle on your concession strategy. If this crisis has uncovered any weakness in RMSs, it's the way they handle concessions. Specifically, systems either lack functionality for concession strategies or those that do (e.g., LRO) don't interface well with PMSs to consume the asking rent/concession combination. 

• If you haven't already done this, schedule regular sessions with both pricing and marketing. Both can solve demand challenges, so be sure not to "double-dip" by reducing pricing, and increasing marketing spend just because the two functions are attempting to solve problems independently.