Craig Pryde – Rental Market Undergoing Change this Spring
March 22, 2021
Virtual Landlord Summit Event Reveals Hope for the Apartment Sector
The 2021 rental market is evolving slowly and landlords are reporting a reversal of what happened 12 months ago. Vacancy concessions are ending, high rise rentals are being filled, and occupancy rates are rising again.
There’s hope that the summer season will be more promising for landlords needing to fill vacancies and for tenants who need jobs.
The nice thing about keeping up on property management trends is you’re better able to gauge your current strategy and operations. The latest data shows continuing rent defaults, however as the vaccinations continue, the summer of 2021 could see a marked improvement in the apartment rental sector.
Chicagoland Multifamily and Apartment Summit Results
Rejournals recently held virtually, their annual Chicagoland Multifamily and Apartment Summit. Landlords from the Chicago area chimed in about their experiences of the previous 12 months and how business is faring currently.
Check out upcoming property management conventions including Apartmentalize 2021 in Chicago later this year.
The report noted that in Chicago, much of the major damage to landlords happened in certain pockets of the city. We can surmise that this was the case across the US, Canada, Australia, and the UK. These are high density regions where people work close to their apartments. When downtown businesses shut down, they were more likely to find themselves out of work, hence the higher rent defaults in these areas.
Single Family Rentals Not Hit as Hard
The single family rental sector enjoyed fewer defaults and vacancies due to lower losses of employment in those regions, and lower vacancy rates due to the fleeing of downtown renters to the burbs, smaller cities and towns.
In Chicago, the popular Loop, South Loop and West Loop areas were hit hardest. Other areas of Chicago weren’t hit as hard, but that’s not to say other Chicago area landlords weren’t suffering losses the last 12 months.
“Statistically, we’re looking good compared to this exact same time frame last year,” Michael said during the panel discussion. “Applications up 7.5%, leads generated are up 19%, CRM activity is up 25%, but overall percent leased is still down by 7.5% compared to this period last year, so we still have a huge hole to climb out of.” — from AAOA post.
One Chicago area landlord, Ken Motew of Mo2 Properties reported his rental apartment portfolio hit 10% vacancy at one point. He reports being down 12.% in rents collected, but his properties are back up to 100% occupancy. In Chicago’s suburbs, another trend is taking place, a movement to build to rent.
“We’re seeing a strong increase in the build-for-rent market,” says Craig Pride of KTGY Architecture + Planning. “of the newer of housing development model where single-family home or cottage communities are designed as rental. “It’s speaking to the fact that people still want to rent but they want a connection to the outdoors.” from AAOA report.
Have Renters Preferences Changed?
One of the key suggestions is that permanent changes have taken place in renters preferences. Given the containment during the pandemic, many are seeking larger accommodations perhaps with room to work from home, but with an emphasis on green space to relax. The demand for houses for rent will continue in the burbs and beyond.
Apartment landlords will be hard pressed to compete on this returning market demand, but they’ve got much lower rent prices going for them in the high rise properties. Rent prices are a big factor for young renters, including students, and those returning to work and moving out of their parents homes.
It’s almost certain the apartment rental market will look vastly different by the fall, as most residents will have received a Covid 19 vaccination. The economy will be rolling again.
The Chicagoland Multifamily and Apartment Summit event is just the first of many upcoming property management conferences as the industry starts to return to normal. It’s been exhausting, but we’re almost there. Hang in there for a better outlook ahead.
If you’re a landlord looking to improve the performance of your rental properties, manage your finances better, and communicate better with your tenants, you’ll find ManageCasa the best tool you have for 2021.