Since the beginning of the COVID-19 pandemic, we have noticed a shift in the rental market. From higher vacancy rates, to rental incentives, and even movement from highly populated downtown cores to more quiet suburban communities.
There have been a number of different contributions to these rental market shifts, and as we enter the stage of vaccine roll outs we are looking to see what a post-COVID year will look like. On a recent episode of Sync or Swim we spoke with 5 rental housing experts who were able to shed some light on their predictions for a post-COVID market. Our conversation included Andie Daggett, VP, Sales & Client Experience at Urban Analytics, Paul Danison, Content Director for Rentals.ca, Matt Danison, Chief Executive Officer at Rentals.ca, Ben Myers, President and owner of Bullpen Research & Consulting Inc., and Pierre Calzadilla, EVP of Growth at Local Logic.
Here are 5 post-COVID predictions we uncovered in the episode:
1. Rental Incentives to Carry Over Post-COVID
As a result of COVID we saw more vacancies in the downtown areas as people were looking to migrate away from densely populated buildings. We also saw businesses shift from in office to work from home, which resulted in people looking for more space with more affordable rent rates, causing them to move into more suburban or rural areas. COVID has also impacted the job market and some people faced loss of employment, which also played a part in renters moving from downtown areas to more cost effective housing in smaller, suburban areas. So with that a lot of landlords offered rental incentives to help fill their vacancies. And as we move into a post-COVID season Andie Dagget VP, Sales & Client Experience at Urban Analytics commented on how those rental rate incentives will be difficult to get rid of.
"Let's say if you've basically dropped somebody's rent around $200 a month, and then their lease comes up for renewal and you've taken that incentive away, you're risking turnover for sure. A lot of people probably wouldn't be able to afford that, so the rental rate incentives are probably going to stay for a little while longer." – Andie Dagget, Urban Analytics
Rental incentives are not only a big draw in Western Canada but right here in Ontario we are seeing more and more outlandish incentives Matt Danison, Chief Executive Officer at Rentals.ca makes a great point of how rental incentives will continue to develop as we move into a post-COVID market.
2. Renters To Make The Move Back To Downtown Cores
One of the biggest shifts in the rental market in 2020 was the amount of renters who moved out of the downtown areas. As COVID hit renters started moving into more affordable suburban areas to find relief from the congestion of the downtown areas. But Paul Danison, Content Director for Rentals.ca believes that post-COVID those renters will be making their way back to the downtown cores. (time stamp 0:38)
"I think people are gonna not only be coming outside, but I think they're gonna come back to the downtown, maybe not quickly, but I think the downtowns are gonna come back and the smaller units will once again become popular, and I think it's a good time for renters between now and the summer would probably pick up one of those units." – Paul Danison, Rentals.ca
3. Rental Market Will Surge Post-COVID
With rental incentives aside the market is due to raise back up. After a big market fall in 2020 it's natural as we return to a somewhat normal post-COVID life to see the housing market begin to rise (time stamp 0:43). Ben Myers, President and Owner Bullpen Research and Consulting Inc shared his opinion with us during our panel discussion on Sync or Swim.
"I'm thinking we get back to peak fall 2019 raise by the end of 2022, and I think the market's just gonna shoot right back up, I think when they open back up the borders up we're gonna have a lot of people that are already approved and they're already working for Canadian companies just coming right in and renting right away." – Ben Myers, Bullpen Research and Consulting
4. Developers to Leverage Outdoor Spaces to Appeal to Renters
Lastly, one of the biggest predictions we are going to see for a post-COVID market is the idea and use of outdoor spaces. During the stay-at-home orders we really began to understand the importance of the community we rent in and the outdoor amenities that the rental community has to offer. As Pierre Calzadilla EVP of Growth at Local Logic mentioned is that the walkability of your rental unit will become more and more high on your list. (time stamp 0:44:30) How far away is the grocery store, the park? These are the things renters will be considering as they look for units post-COVID.
"I think developers are also seeing this, developers are thinking about their community, about what they're building, about how they can impact an area, 'cause these amenities inside the building was also like, What's happening in this neighborhood? That's gonna be attractive to people. And I think that's something that is just gonna grow and the seriousness of it. We have to think about this holistic community that we're building." – Pierre Calzadilla, Local Logic
As we move into the end of 2020 and the start of a normal life post-COVID we will not only see a rise in the housing market, especially rent increase, we will also see more renters who have balconies, outdoor spaces, and walkable communities as part of their must-have list when renting.
5. Property Listings Will Double Down on Content
To continue on that last point, marketers need to be prepared to highlight these new "must-haves" in their content. They should be highlighting key terms in their ad copy and in their visuals to ensure renters know what they're offering. If they have increased the floorplans of certain units to accommodate work from home living, added an outdoor garden, if you're close to activities that allow for social distancing, ensure your marketing highlights these features.
"...that's the biggest thing that we've seen at Rentals.ca and working with our clients, is that they have really stepped up their game in trying to provide as many photos and 3D tours and more descriptions within what the rental looks like...And details of the steps surrounding the community, that's so important to the renter when they're not really able to be there in person." – Matt Danison, Rentals.ca
So, what can the rental housing industry expect from a post-COVID world?
As vaccines continue to roll-out across Canada and we find ourselves moving towards a "post-COVID" world, we can anticipate a few things ahead.
First, we can expect to see more and more people returning to the downtown areas. We will begin to see people starting to resume their commuter lifestyle by taking public transit and returning to their offices. We can also expect rental incentives to stick around for the next year or so, as rental rates begin to rise as we enter into 2022. Outdoor spaces will continue to be an important criteria for renters, whether it includes private balconies or shared outdoor gathering spaces, developers will need to consider them in their plans moving forward.
One of the biggest things we can expect to see from renters in particular is how they search for and lease rental units. Renters are looking online more and more for the information they need, including better photos of the unit as well as the surrounding area, 3D virtual tours, and more options for how they take tours will continue to be important for renters. Now, more than ever, is the time to get your rentals online and showcase true transparency with your units.
To watch the full video on this year's rental market predictions, go here.