LWS Rental Market Update No. 7: Future-Proofing Your Properties for COVID-19 and Beyond
As property management firms adapt to the ongoing COVID-19 pandemic, questions linger around its long-term effects on the rental housing industry. Although it's been a challenging time for all, this situation has presented an opportunity for integrating new innovations and improving operations.
We'll use this time to make some observations around the lasting impact of COVID-19 on the rental housing market, and how property owners, operators, and marketers can leverage this time for future-proofing their businesses.
In this post, we'll cover 3 key areas for property management firms to consider as they look towards the future:
- Supply and demand
- Digital marketing
- Asset control and investments
More Supply Encourages More Vigilance
Short-term rentals enter long-term market
Recent reports show, COVID-19 has led to an increase in long-term rental listings in March. With tourism and business travel having ground to a halt, both groups speculate that owners of previously furnished Airbnb units are repurposing them for long-term rental use. Rentals.ca data shows a month-over-month increase in March listings of above 12 per cent.
This report comes alongside news that two downtown complexes in Toronto, the ICE Condominiums on York Street and Maple Leaf Square next door listed approximately 125 units as long-term rentals. According to Zhen Liang, the broker of record and president at RE/MAX Excel Advantage Realty,
"For as long as I've operated, I've never seen this much inventory for long-term in [these buildings] specifically."
The article goes on to say that about 80 of those listings are due to COVID-19 and restrictions on short-term rentals.
Fairbnb Canada - a coalition of homeowners, tenants, tourism businesses and labour organizations - predicts that the COVID-19 crisis could put up to 7,500 homes back on the long-term market, in the GTA, as owners seek to minimize losses. We could see even higher numbers, if these restrictions continue into, and beyond the summer months.
Our observations: Going forward, it may become difficult for owners to enter or re-enter the short-term market, as regulatory bodies tighten restrictions on these types of rentals to control another outbreak. Therefore, oversupply in long-term rentals could stimulate greater competition in the market, forcing property managers to invest more heavily in marketing and advertising to remain top of mind with prospective tenants.
Cleanliness More Critical for Renters
As the COVID-19 health crisis puts vulnerable citizens at risk, it is critical that landlords are vigilant about preventing the spread of infection, and the pandemic could have lasting changes on consumer preferences when it comes to cleanliness. In fact, in a recent RentBoard survey, one of the top concerns from renters was, "Unclear on property conditions, maintenance, cleanliness and general upkeep."
This story by Global News, reveals that this is now a growing issue, as people are beginning to question cleanliness more than they have in the past. Chris Gibbs, chair of Creative Industries at Ryerson University says,
"[Renters] are going to want to go to trusted experiences that [they] know have certain cleaning standards."
Our observation: Health and safety will continue to be a top concern for renters, and properties that can highlight their vigilance in this area will come out on top.
Going Digital, No Longer Optional
Virtual Touring Becomes Essential
The option to view properties in-person during COVID-19 has proven challenging for many, and virtual touring is becoming a key part of the renter journey. Virtual tours are no longer a "want" but a "need" for marketers looking to attract and convert new leads right now. But will this shift have long-term influences on rental housing and how renters perform their searches?
Reports show that renters are generally comfortable using this method to view properties, with up to 72% saying they are willing to rent solely based on virtual tours. So, as properties use virtual tours as a lead magnet, and successfully sign leases during COVID-19, the use cases could trickle well beyond the pandemic. In fact, the majority of renters (59%) prefer a combination of self-guided and guided tours to make their decisions, and having both of these options will serve to enhance your value proposition.
Our observations: Virtual tours will not fade into the background post-COVID. Property marketers will continue to leverage this tool on a larger scale than ever before. Moreover, those who do not, risk losing out, not just now, but in the future.
Future-Proofing with Digital Marketing
If there's one thing every industry can agree on right now, is the increased need for digital communications.
Our data reveals that the number of page views for rental listings and online portals has increased 46% (March 18th - 31st versus April 17th - 30th) across Canada, and users are looking at an avg. of 9.3% more pages per visit. Part of the reason is that potential tenants no longer have the ability to enter the units for an in-person tour, leading them to heavily research online, and creating a surge in virtual viewings.
For properties with multiple listings, the ability to update your site content and advertising to communicate new options like "virtual touring" across your listings is essential for maintaining operations.
Additionally, having an updated website that is easy to navigate, includes updated photos, virtual tours, and drives leads through online bookings is one of the most significant competitive differentiators right now. (Here are some great examples from websites we've worked on.)
Our observations: Property marketers are going to continue heavily investing in online digital advertising and marketing to improve efficiency and target prospects. If you are relying on outdated digital branding prior to COVID-19, this will no longer suffice. Improving your online presence with digital marketing and communications will become essential for future-proofing your business.
Doubling Down on Purpose Built Apartments
For many commercial property owners and landlords, COVID-19 is drastically reducing their monthly revenue, as many tenants struggle to make their lease payments and are forced to close down shop. And although some rent relief is coming, early reports show the assistance program may fall short.
Meanwhile, virtual work is transforming residential properties into a hub for home offices, and residential communities are reporting positive rent revenue (collecting up to 95% of rent in April) despite the pandemic, which may lead commercial property owners to reconsider their investments going forward.
Our observations: COVID may force businesses to downsize or leave their commercial office space for a number of reasons, including:
- Higher preference for remote workers
- Restrictions on enclosed spaces
- Changes in consumer shopping patterns
- Economic downturn
This may leave many companies with undiversified portfolios, and commercial only landlords, considering a fore into residential. Therefore, investment in purpose built apartments in Canada could double down during this time.
As property owners and operators move through this challenging time, it's important to use the lessons learned as a way to guard yourself for the future. By considering some of the observations made here, you can begin to arm yourself with the tools and strategies for long-term success.