As we enter the 9th week of the public health and the ensuing economic crises, it’s probably a good time to take stock. It’s been a bit of a roller coaster, and the ride is clearly not done yet.
The first three weeks starting March 16 were brutal. We saw leasing drop by more than 50% and more like 90% in markets like New York, the San Francisco Bay area and the Greater Los Angeles Metro area. These numbers appear consistent with data that RealPage and Yardi have released.
Since then, numbers have been remarkably good: leasing has risen every week since then and is now on par nationally with last year. The three markets above appear to still be off 20-25%, but some other markets are showing YOY increases [we should note that Realpage is reporting a roughly 6% decline in rent, so leasing activity is coming at a price]. Rent collection was off roughly 4 points in April, but NMHC has reported through May 6 that May collections are trending 2 points better than April.
A-class properties are leading on rent collection while trailing on leasing with C-class communities doing the exact opposite. All of this has taken place through the seven worst weeks of unemployment claims in history, with over 33 million total claims filed to date.
At D2 Demand, we’re not surprised that rent collections have fared better than feared. Hourly workers have been disproportionately affected, and the $600 per week federal unemployment supplement means most of these people are making more money unemployed than they did while working. While some professional workers are affected, most of them have at least some short-term buffer to continue paying for housing.
The first 3-4 weeks of this period was pure crisis management: setting up work-from-home systems, communicating with residents and associates, embracing virtual touring and leasing, shutting down common areas and figuring out a host of service and other logistics. What came next was a period best described as ‘finding a rhythm.” It’s not really a “new normal” (despite how overused that term is), but more of a “no longer on crisis management calls 12 hours a day, so I can catch my breath and think for a moment” kind of thing.
Last week seems to have marked a transition to planning for partial openings: some partial openings of amenities, maybe some in-person touring with special protocols, looking at service request and deferred maintenance backlogs, etc.
We don’t pretend to have a crystal ball, but here are a few thoughts for the next few weeks (we emphasize the shortness of term in these forecasts):
That said, there are factors that make it hard to predict anything past early summer:
Here are our high-level ideas about what that means to multifamily operators:
What do you see happening in the next few weeks? Months? We’d love to hear from you!
Donald is CEO of Real Estate Business Analytics (REBA) and principal for D2 Demand Solutions, and industry consulting firm focused on business intelligence, pricing and revenue management, sales performance improvement and other topline processes