Life under COVID-19 means people are now at home most of the time. And while this is better for public health, since it helps slow the spread of the virus, it introduces new challenges for multifamily owners and operators.
With millions of Americans working and learning from home, properties that used to have residents on site only part of the day now have them around nearly all of the time. This is putting added strain on apartment properties including increased wear-and-tear on units, creating challenges for scheduling routine maintenance, generating greater demands on utilities, amenities and services and producing more waste and recycling volumes to manage. Owners and property managers are struggling to balance the extra expenses of this work with the money they save as amenities like fitness centers stay closed and many communities continue to cancel in-person events.
“The biggest impact to our service team involves balancing their workload,” says Lela Cirjakovic, executive vice president for Waterton, based in Chicago. “The enhanced cleaning protocols have required changes to work schedules.… Similarly, communities are spending less in certain areas, such as resident and guest hospitality. Efforts to balance expenses and offset new costs have been successful.”
The extra cost of the coronavirus crisis
Some apartment investors have already begun to increase the dollar amounts they estimate for maintenance costs because of changes caused by the COVID-19 pandemic, according to Sarah Yaussi, vice president of business strategy for the National Multifamily Housing Council (NMHC) in Washington, D.C. Long term, this means the incomes generated by apartment investments may take a hit if average rents stagnate or fall in a prolonged recession while costs rise.
However, despite these pressures, apartment investments are likely to remain attractive because the issues (including plummeting occupancies and rents) facing other property sectors are far more severe.
“Other real estate sectors, specifically retail and hospitality, have fared so much worse than multifamily that its attractiveness as a real estate investment may have increased,” says Rick Haughey, vice president of industry technology initiatives for NMHC.
Staying safe requires expensive cleaners
Since the coronavirus began to spread, apartment companies have spent time and money to constantly disinfect places used by residents, such as stairwells, elevators and lobbies.
“The most dramatic change in expenses is the addition of new cleaning products and protocols and personal protection equipment,” says Waterton’s Cirjakovic.
Apartment companies like Waterton rely on standards set by the federal Centers for Disease Control and Prevention, in addition to state and local guidelines to clean the common areas in its communities that are still open to residents. However, these standards are not always clear. Especially early in the pandemic, individual apartment managers were sometimes forced to rely on their own judgment.
“How many alcohol wipes do you need to use to keep the gym clean?” says NMHC’s Yaussi. “There was a while when they didn’t know.”
Even once each apartment company settled on its own new standard for cleaning, the necessary supplies have often been expensive and hard to find. In the first months of the pandemic, basic supplies like hand sanitizer and alcohol rubs were sold out for days or weeks at a time at many retailers.
Managers also had to pay to provide personal protective equipment like face coverings to filter the air their workers breath and avoid potentially spreading the virus.
Some managers also have had difficulty convincing residents that visit leasing offices to consistently wear masks. “It is a new job description for the leasing office staff: handling people who refuse to wear masks,” says Haughey. “Some companies are hiring security guards.”
Some potential residents that visit the property to look at apartment also resist wearing masks. “Requiring prospects to wear masks when touring—it sounds simple but it is not,” says Yaussi.
Some firms are investing in technologies that will allow them to offer self-guided tours, including electric locks and systems to allow prospective residents to verify their identities and schedule a tour. Others have used augmented reality and virtual reality to allow residents off-site to view properties.
“Properties with a tech-forward outlook are investing heavily into smart apartment and building access technology to help support self-touring, which has proliferated during the pandemic,” says John Helm, partner at RET Ventures, based in Park City, Utah.
Staff members re-balance their work
The work that staff members do is also changing. In most parts of the country, they no longer engage with residents at in-person events scheduled by the community. Many leasing offices are open—but in a limited way.
“Our offices are open to our residents by appointment, which is helpful but does not go far enough to mitigate that loss of connection,” says Cirjakovic. Waterton has added personal phone calls to its communications with residents in specific situations. “It’s an opportunity to listen to our residents and confirm that our efforts are aligned with their needs.”
Cleaning crews are also adjusting their work schedules to focus on the areas that get the most use from residents. “They may not clean the gym, but they have to spend longer cleaning the grounds,” says Jonathan Cohen, chief operating officer for Universe Holdings, based in Los Angeles.
Maintenance crews have also been cautious about entering apartments—creating a pile-up of deferred maintenance that may create costs of their own. For example, a dripping faucet will eventually waste a significant amount of water.
“It has become more difficult to perform repairs or upgrade. We can’t into apartments with the same ease,” says Cohen. “People are cautious, and we are cautious.”
Trash piles up
With so many residents at home, the trash bins spill over at many apartment communities.
“Pre-pandemic, trash compactors were emptied every five days. Now, in some cases, the schedule is every two to three days,” says Mike Brewer, chief operating officer for RADCO Residential, based in Atlanta. “Working, playing and learning from home coupled with the delivery of most home goods creates a tremendous increase in trash and recycling volume.”
The amount of trash produced at apartment properties was growing even before the pandemic, largely because residents were receiving more packages. “A lot of these buildings did not have great trash design—they had bins overflowing,” says Yaussi. “We’ve heard that a lot of residents complain about the cleanliness of the trash area.”
In the long term, solving this problem might require expensive renovations of the trash and recycling areas. But for now, apartment managers simply have to schedule enough workers to get the job done.