The COVID-19 pandemic continued to present challenges to the multifamily industry in August, according to proptech firm MRI Software, whose data shows a new high for leasing concessions, accompanied by pricing that continues to trail 2019 by 5%.
Lease pricing was 5% lower than in August 2019, continuing a trend that emerged in July 2020. The average concession value rose 17% over July 2020, the firm reported. MRI’s newest report compiles data from more than one million market-rate units (a subset of the total units managed by MRI clients) in January through August 2020 and January through August 2019. Analysis includes both year-over-year and month-over-month comparisons.
“At first glance, the statistics may seem alarming, but in terms of future planning they’re actually reassuring,” said Brian Zrimsek, industry principal at MRI Software. “On one hand, they reflect the struggles of landlords and property managers in coping with the effects of COVID-19. On the other hand, they reflect best practices in expiration management, which tells us that owner/operators are responding strategically to the challenges. The concessions and pricing we’re seeing today are incentivizing shorter-term leases of 9-, 10- and 11-month terms, and the strategy is working. As a result, owners and property managers are ensuring strong occupancy rates at present while clearing a path to leasing activity during next year’s seasonally busy summer.”
MRI also found that renters are continuing to adopt technology, with 50% more prospective renters using online applications compared to August 2019, and 30% more residents using online portals than a year ago. Meanwhile, the use of card payments remained popular, at 33% of electronic payment volumes, representing an increase of 92% compared to January 2020. As Zrimsek has pointed out in previous reports, card usage may signify problems with renters’ cash flow or be a way to gain credit card perks.
Zrimsek notes that MRI will continue to provide market reports in the upcoming months.
“Owners and operators have the unenviable task of budgeting for 2021 ahead of them,” Zrimsek remarks. “They can’t simply factor in annual increases to their projections as they might have done in previous years. We hope that our data will help inform their analyses.”
