"In the downtown cores of both Edmonton and Calgary, basically all the buildings are offering incentives. We've seen this have an effect on the inner sub market areas." — Andie Daggett
In this special episode of the Sync or Swim podcast, we discussed the Rentals.ca 3rd Annual Rental Market Predictions Report, authored by Paul Danison. Host Mitch Fanning brought in Paul and four other rental market experts across Canada to answer the question:
How has COVID changed the Canadian rental housing market now, and into the future?
Our panel includes 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's what we talked about:
- Have we hit the bottom in the rental market?
- Have landlords' incentives really enticed skittish renters?
- How has online search behaviour changed regarding rental property?
Mitch Fanning [0:00:36.5]:
Welcome back to Sync or Swim, I'm Mitch Fanning with Rentsync, and today is a special episode because we're going to be discussing the Rentals.ca third annual rental market predictions report, which was authored by Paul Danison back in February. And to help me do that, of course, I've got Paul along with four other rental market experts across Canada, so welcome everyone, and before we kinda get into the conversation, let's start with some brief introductions and I'll get everyone to kinda introduce them themselves, and I'm gonna start with Andie from Urban Analytics.
Andie Dagget [0:01:15.1]:
Hi, thank you so much for having me today, Mitch. My name is Andie Daggett, and I work with Urban Analytics as the Vice President of Sales and Client Experience. Urban Analytics is a market research and advisory firm, and we specialize in the new multi-family home residential markets in Metro Vancouver, Calgary, Edmonton, and most recently in the GTA in Ontario.
Mitch Fanning [0:01:37.3]:
Perfect, thanks, Andie. Next, we have Paul from Rentals.ca
Paul Danison [0:01:42.3]:
Thanks, Mitch. I'm Paul Danison the Content Director for Rentals.ca, and I've been a long-time journalist, reporter, editor, and now converted to working for my son's company rentals.
Mitch Fanning [0:01:55.3]:
Perfect. And moving across the screen, I've got Matt Danison from Rentals as well.
Matt Danison [0:01:57]:
Thanks, Mitch. My name is Matt Danison, CEO of Rentals.ca. Rentals.ca is a marketplace that focuses on building the best rental search experience in Canada. Our team focuses on design, speed, and communities to make the difficult process of searching for a rental home much easier.
Mitch Fanning [0:02:19]:
Perfect, and next to Matt is Ben, Ben Meyers.
Ben Meyers [0:02:21.9]:
Thanks for having me on the podcast, I am the President of Open Research and Consulting, I'm actually a special market advisor for Baker Real Estate as well, but on the bullpen side, we are a kind of a boutique residential consultancy firm that works in South Western Ontario, and I write the National Rent report for Rentals.ca, it's been a great partnership that we've had over the last couple of years...
Mitch Fanning [0:02:46.7]:
Perfect. And last but, certainly not least, is Pierre.
Pierre Calzadilla [0:02:48]:
Hey there everyone, thanks for having me, Mitch, Pierre with Local Logic. I'm the EVP of Growth here. What we do is quantify location across North America, the US, and Canada, and we provide tools that approximately... Like for example, in Canada, 80% of the real estate portals here in Canada use our data, and it really gives us a good understanding of what people care about when they're searching for a home, via it for rent or for sale and I'm excited to be here.
Mitch Fanning [0:03:02]:
Perfect, and obviously some of that data was in the report, so we'll dig into that in just about five minutes or so, so obviously for the report Rentals.ca, they interviewed 26 experts across Canada. So it was a very extensive report, and if people listening haven't read it yet, we'll put it in the show notes, and I implore people to take a look at it, but actually, my first question is to Paul. Paul, how long does a report like this actually take to produce...
Paul Danison [0:03:45.0]:
It's about a two-month process. As you said, this is a third annual, and when we first started out with this, we looked around, we saw reports that were done out there, but it was basically in the opinion of one person, so our idea was to get data analysts, economists, housing data people to give us their opinions, give us what's really going on on the rental market in each certain area of the country. So we set out to do that and we have like you said, we interviewed 26, we talked to 26 people and got their perspectives and insights on the rental market for 2021.
Mitch Fanning [0:04:22.5]:
Yeah, again, it covered right across Canada, a lot of different experts from different kinds of parts of the industry, so it was great to see. I guess my next question, and Paul I'll kind of point to you again when I read it, what were some of the biggest differences that you noticed as you maybe you were writing this between 2020 and 2021, or maybe... What were the biggest takeaways?
Paul Danison [0:04:54.1]:
Well, Covid happened. And that just changed everything. We are projecting rent increases type continued type vacancies in a lot of the metro areas, and All of a sudden now we're talking about working from home, and the smaller surrounding cities have higher rents because people are coming out of the largest cities and metro areas. So that's a couple of things on. Ben, what's your take?
Ben Myers [0:04:56]:
It's interesting, putting together, obviously, this report this time around, the market has fundamentally changed in 2019, rents are going up percent, 5, 6, 7%, you know on an annual basis, countrywide, obviously driven by Vancouver, the GTA and in the Montreal CMA areas. Just huge growth in those areas, and then obviously covid happened, the borders were shut down, we weren't getting the level of immigration in the marketplace, students were not going to in-class education, so they were staying with mom and dad or they're staying in their university towns. People weren't starting jobs in the downtown cores of many of these markets, some people became scared of living in an apartment and started looking for single-family properties and markets outside of the core to get away from other people, so it's really… We've never seen this type of shake-up in a single 12 months in the history of the Canadian rental market. So certainly, so many different factors impacting the market, and Paul did a fantastic job trying to go out and seeing some of those different factors that are impacting different markets across the country.
Mitch Fanning [0:06:37.0]:
Now you both, when I asked that question, you both went to rent rates, and so let's start there, and in the report... And there was a prediction that rent rates would obviously, as a result of covid, would naturally go a little bit lower in the first four to five months, but potentially rebound about 3%, maybe nationwide towards the end of the year. Now, I just happened to kind of go on to the Rentals.ca March rent report and looked like rents had almost stabilized March versus September. So I guess my question is, and I'll ask Ben, I'll ask you this question specifically. Do you think we've hit the bottom, do you think maybe it's come early and we're not gonna have to see the fort the fourth or fifth month play out?
Ben Myers [0:07:27.4]:
As it's always hard to tell if we've seen an increase, a fundamental longer-term increase in demand or is just the short term spring market and obviously the spring, the rents really pick up in the marketplace, so it's a little bit harder to tell, and obviously, the Rentals.ca information is asking rent. It's not the actual rent paid, so because rentals do keep onboarding all these new landlords and especially newly completed rental apartment buildings, so they'll add 200-250 new units onto a single market, so you can't have the type of months over a month fluctuation. So it's really hard to say if this is the bottom that we may see flat rents, I think until the... Till the middle of the year, but I think when the vaccinations ramp up which, seems to be happening right now, we'll start to see people looking to get back to normal. And people trying to time the market. They get at a very lowest point, I think we're starting to get to that at a point where people are saying, Well, this might be the lowest point that I remember gonna see these rental rates, so I'm gonna make a move with it or do it right now.
Mitch Fanning [0:08:31.6]:
No, exactly. I wish I was back in my 20s renting an apartment. So... Andie, I'm gonna ask you kinda the same question. You're out in Western Canada, what are you seeing?
Andie Daggett [0:08:43.7]:
Yeah, so same thing as Ben was saying, rents have definitely stayed pretty low, there's a ton of competition, especially in Alberta's market, we've seen a ton of new supply coming market over the past two years, for example, in Edmonton, just over the last two quarters, over 18 buildings launched, so in the fourth quarter of 2020, in the first quarter of 2021, so it's a lot of product to come on to the market in a six month time period, also during periods of the year that historically do have slower absorption rates. So we have seen those rents kind of stay pretty low to incentivize renters to rent as Ben was saying though, as vaccinations do roll out, ideally, these buildings will be able to hit a period where they can raise those friends. Another thing that we're optimistic about is students going back to university, so the University of Calgary has already pitched a statement saying that students should prepare to go back to in-class learning in September, which is great to hear for the city, and hopefully, that will spur some more immigration, which will, of course, help that rent market, especially those buildings that do surround those universities, they definitely take a hit without those students renting there, so hopefully, that will spur a little bit more activity and then we can start to see the rents to creep up a little bit more back towards at least more market rents rather than these lower rents that we've been seeing for the past year.
Mitch Fanning [0:10:11.5]:
Now we can't leave a conversation about rent rates without talking about the crazy incentives that we've been seeing in this market. And so, Andie, I'm gonna stay with you. Obviously, rental demand has been the strongest in the secondary markets, and Rentsync has seen that as well, obviously many cities, specifically those in the primary markets, are seeing that rapid decrease, like we've talked about, and so as a result, landlords have had to increase incentives to entice prospective tenants. What are you seeing out there? Can you give any crazy examples of what we're seeing out there, and also, too, as a follow up, are these incentives here to stay?
Andie Daggett [0:10:58.7]:
That's a great question. So yeah, incentives have been a hot topic throughout 2020 as a renter, it has it's really been a renters market, you're basically able to in Calgary, especially in the beltline, you're able to basically just hop between building to building and negotiate with all of the landlords and the property managers to get the best rent in the best incentive because they all have vacancies. So it is very competitive. So the incentives that we've been seeing in Calgary and Edmonton throughout 2020 were aggressively two to three months free rent on a 12 month lease, so we also track net rents at Urban Analytics, so we do factor those rents into our research, or, sorry we've factor those incentives into our rental rate research, so the rent that we report on are those net rents, so that's why we really did see those decreases is because the incentives were factored in, so when you're putting in two to three months free rent, it really does it takes a 1400 unit down to almost 1000 a month unit, and we are still seeing that in Calgary's market with these really low rents, and it's not just the new buildings that are launching 250 plus units that are trying to get that absorption, they're trying to get renters in the door, we're seeing buildings that have been fully stabilized since 2017-2018, offering incentives as well on their turned over older units, they're having to remain competitive, so we're seeing these incentives across the board, it's not specific buildings, it's basically almost every building, especially in areas where we have seen quite a bit of new supply come on, so the downtown cores of both Edmonton and Calgary are all basically, all the buildings are offering incentives, and then we've also seen this kind of have an effect on the inner submarket areas as well, so buildings that are... Wouldn't be... You couldn't walk to your office if we are working from our offices, these buildings are transit-oriented, but still a good 10 minute drive from the downtown core, they're actually competing with those downtown core buildings because of the aggressive incentives that those downtown buildings are offering, and so they're finding when they originally launch these buildings that they were only competing with suburban locations, and now they're competing with these high rises, amenity-rich buildings, so it has made the entire market very competitive, so the majority of incentives we've seen are those rental rate incentives to offering a few months free, we also have seen free parking for maybe six months or maybe the year or just reduce parking grants, and then also obviously the Telus incentive is always offered all the time, nothing... I wouldn't say anything too creative thought, that's all basically, all the developers are just offering that rental rate incentive for the most part, as lots of renters are either coming out of university, they lost their job, and it really is the budget for them, they're very budget-oriented, so if you're throwing in more creative incentives that might not stick with the market in Calgary and Edmonton, because our biggest struggles that a lot of these people renting don't have jobs, took a salary cut, have job loss risk, and so they're really looking just for the bottom line, trying to get that monthly rental rate down so that's what the developers are offering for them right now.
Mitch Fanning [0:14:16.5]:
Sure, so speaking of creative incentives, Paul, I'm gonna direct this one to you. I recall when we had our prep call, you mentioned that there were some interesting ones that you've seen. Do you wanna speak to those?
Paul Danison [0:14:30.7]:
Yeah, we're seeing a lot of the same incentives that Andie talked about, but recently they're getting a little more creative besides cashback and free utilities and free wi-fi, all that. A landlord in Montreal offering a lifetime experience of like... Plus the two months' rent, you would get a tandem skydive experience or a free helicopter ride, and that was in Montreal, in Toronto, they were offering a free fully stocked wine fridge. I think I'm up for that one.
Andie Daggett [0:15:04]:
Mitch Fanning [0:15:05]:
Absolutely. So let's kinda switch gears now and Pierre... I'm gonna come to you. Obviously, covid has changed behaviors and specifically renter behavior, now to capture the changes in renter lifestyle preferences as a result of the pandemic local logic compared the first quarter of 2020 versus the fourth quarter of 2020 so Pierre, what was the result of that analysis? That you came up with.
Pierre Calzadilla [0:15:20]:
Yeah, I mean, the biggest difference is, and I just wanna caveat this, the top three things didn't change, what changed was their order, and so specifically it was public transportation and grocery stores or in schools, those are the top three things that people care about when searching for a place we track about 17 depending on the market, and those top three, there was basically a swap between grocery stores and public transportation, which was super interesting and obviously clear about what's happening in the market, still retained top three status, but it was a big drop in terms of percentage, I went down about, I think, 24% comparatively. So it's one of those things where I think the long-term vision of this is like there's a certain set of workers that don't need to transport right, that don't need public transport to the, that I'm one of them, one of those people who did actually take public transport on a regular basis, and now I will never have to... Again, done. And it's by choice now, like I don't have to go in the office anymore, but the problem is most jobs don't have that flexibility yet, so I think that's why we're seeing it still stay as a top-three thing, but for certain kinds of workers, they now have gone with, Hey, you know what, I'd be closer to the grocery stores, that was always a top three, and now it's a number one, and it's just... I was, I can't tell you during the pandemic, how painful it was to go to the grocery store, but you also wanted to go quickly and get back... Right, you didn't want... And so it came so clear like, Oh, thank God, I chose where I live, and thank God I made those decisions like when I picked this place, 'cause had I optimized solely for a public transportation, I would have been in a really bad spot, and I think that's the thing that people realized is you need to optimize for your lifestyle as much as your needs to get to work.
Mitch Fanning [0:17:41]:
Now, do you think that order has kind of almost codified, it is gonna remain almost permanent, or do you think it's gonna go back and forth?
Pierre Calzadilla [0:17:44.1]:
It's tough. You hear what Andie just shared, right? I'm certain that those 18 buildings that went up in Vancouver were all around transit, and at the end of the day, like many jobs still require people to go into the office, I think that's obviously something that what we can see that being a trend that long term I think is not the reality, and so... But people also still to wanna... It's gonna be here, it's gonna be real, but I think the people still want transit, and I think once the vaccinations go out, once people feel comfortable being out and about like I will take the train again, I'm not going to until we're all vaccinated, but I will take the train again, and I won't drive into the city, you know twice a month, I will actually take the train, and once I feel that it's safe to. And I think at that moment, I think people will be way more willing to ride transit and will now reprioritize it again at that time.
Mitch Fanning [0:18:41]:
Sure, and so I'm gonna turn to Matt on the flip side on Rentals.ca, have you noticed any differences in search behavior as a result of what we've gone through?
Matt Danison [0:18:48.7]:
Yes, the biggest thing is people are looking for bigger spaces to set up their office, and they can find that one thing that we've seen at Rentals.ca the search volume substantially increased for cities outside the big metros, such as St. Catherine's, for example, or Guelph and Waterloo, and that continues to be true. So I think going forward, we're still going to see what a lot of folks are realizing, what Pierre touched on, that they don't have to do the one downtown a more, that they could find a bigger space to live for possibly the same prices they're paying in downtown or even cheaper, so that's the biggest thing to take away that we've continued to see is this a search volume outside to take metros that... Again, I think it's gonna hold true into 2022.
Nicolina Savelli [0:19:46.3]:
Like what you hear so far, make sure you never miss an episode by clicking the subscribe button now, this podcast is made possible by listeners like you. Thank you for your support. Now, let's get back to the show.
Mitch Fanning [0:19:51.4]:
So I'm gonna kind of switch gears a little bit and I'll stick with you, Matt, on this. We just kind of went through a renter behavior, but obviously landlord behavior has changed as well, and we obviously have seen virtual tours, 3D tours, and really other digital transactions becoming kind of bigger as a result of Covid and really becoming more common in the renting process. Again, you know not to sound like a broken record, is this kind of a trend, or is this something that we feel is gonna be here to stay, and is the leasing agent a thing of the past?
Matt Danison [0:20:34.3]:
No, the leasing agent will always have a role, and it's just gonna be a little bit different and they're gonna... We've seen it during the pandemic where the leasing offices were put on pause for a lot of the main chunk of the last year and this year, so that's gonna continue with that force lease agents to do is quickly learn different technologies and tools to essentially virtually show the apartments through 3D tours and, you know whether it be FaceTime or other platforms, that was a big change for a lot of leasing agents, they had to get really quickly up-to-date on all the different ways to add transparency to the search experience when someone couldn't come and visit the apartment and have that face to face interaction. So I think 3D tours have been around for quite some time, but definitely, the pandemic has really brought those up as far as the main tool to show apartment nowadays, and so, for example, just some interesting stats that that to share that last year we ran a survey around May and June of 2020 when the pandemic hit. And we got feedback from 16000 renters across 181 seats in Canada. And one of the questions we asked was, would you sign a lease without actually seeing it in person, if you had the opportunity to see it through a virtual tour, and... 37.7% said yes they would. Which I thought was pretty remarkable that people now are... These 3D tours are so transparent, so good that to be able to see if there is mold on the ceiling or really, really every little aspect of the apartments, and so they are confident to sign a lease without them actually seeing it... Again, that's pretty remarkable. And another 42% said, Hey, they would really want to use a 3D tour to narrow down their choices quickly, and that just is a game-changer and it saves so much time in even post-pandemic going downtown, trying to find parking, paying for parking. Showing up to the place and realizing that there is one aspect of the kitchen that they didn't like That wasn't shown in the photos and waste everyone's time. So I think this is a huge time saver, and it's going to be something that... It just kind of becomes a standard, and 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 description 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. So that's gonna really be a thing going forward, is trying to add as many details as possible, to the listing to give that renter a chance to fully understand what it's like to live there and the experience of the community, and again, that's key to the track renters and add confidence to the renter and trust as well.
Mitch Fanning [0:24:04.3]:
Yeah, it's almost for better, for worse, has forced the landlord or the property management firm to be a little bit more transparent with their digital appearance as a result of that, I'm gonna open up the question to the floor to see if there's anyone else who wants to comment.
Andie Daggett [0:24:23.2]:
I was just gonna add to that as well, just with the transparency, doing our research at Urban Analytics, we do all primary research, so we contact either leasing staff directly, sales staff, or the developers directly for all the research we do conduct. However, we are obviously on a lot of these projects websites as well, checking their websites, checking to see, especially for new project launches, just trying to get that preliminary information that we can without having to bother our contacts too much, and we found actually a lot more transparency on websites, showing available units, showing those 3D tours, a lot more photos, a lot more interactions with those chat boxes on developers web pages that we've never seen that before offered on their projects, especially on the... I know we're focusing on rental projects, but on the multi family for sale condo side of things, we found a lot of developers throwing their whole site plans on their website, blocking off any units that are sold and showing what's available, just to really have that available for potential buyers and as well as renters as well, to just, again, save a lot of time, and you know, they know that people are doing a lot of their research for buying a home or for renting online all their computers, and so if you want an advantage, you do have to have a lot of your information available at their fingertips because you're not getting that walk-by traffic that we used to see in the market, so...Yeah, the transparency thing has been huge
Mitch Fanning [0:25:44.7]:
Couldn't agree more on one thing
Matt Danison [0:25:57]:
Really quick on the landlords that it's great if you have a lot of space, but if you're a landlord, I think there's a lot of landlords that own a small condo downtown, those are pretty popular in the last few years, and so if you're a landlord that doesn't have a much space offer and a lot of renters are looking for more space. You're in a tough spot, right? So I think if you gotta be creative if you own a space that isn't that large and it's not as attractive today, so I think Landlords, what they could do is think about ways to make that small space an exceptional living experience and try different things, understand what's going on. Where people are spending their time. So a lot of renters and people in general, spend a lot of time watching movies and their indoors all day long, so Disney+ and Netflix, 're watching and streaming a lot of content and videos, so possibly if you have a small space, maybe you put in in a movie projector cost maybe 1000 dollars, but it makes that experience pretty exceptional and I really haven't seen landlords go about offering things that some have has been pretty great, but just ask you questions to understand. And ask your renters in general, like, Hey, how can we make this small space is really great for your living experience. We know it's tough because you have a family and you're trying to work from home, but possibly, if you can't do it in their space and you own the building, then put in phone booths, coworking places have those phone booths for you to go down. So if you have kids run around and it's loud and noisy and you have an important meeting coming up, you can walk downstairs and turn that amenity, that's not being used into a room full of phone booths where someone could go in and plug in for an hour and have really, their important phone calls and then come back up to their space with their family...
Mitch Fanning [0:27:42.6]:
That's a good point, Pierre I think you had something you want to add.
Pierre Calzadilla [0:27:45]:
Yeah, I just wanted to say, the real thing that happened here is all this technology was already been here, right, and the issue is that covid and the pandemic really forced adoption across the industry, you talk to any of these... We work with many brokerages and property managers and websites in the US and Canada, and a lot of the stuff that they already had, just the adoption was like 10% or less, and what the pandemic did was like, holy crap, I'd better use my virtual tour now, and you've seen many domains go full tilt, where if you don't have a virtual tour, you're not even on page one anymore, and so the expectation now from the consumer on the search side is that they're gonna get a more immersive experience, and on the transaction side that they can do it all as much as possible without having to step into an office, and then the piece in between here is removing a decision, the biggest problem is that real estates about location. So back to Matt and I think Andie's point, a lot of these developers are seeing, and this is true, this is what we do, is the need for this location aspect being digitized, how do you express what it's like to live here. Okay, so you understand the apartment... Now virtual tours and photos, but then they have to live there. So what's around... And that's where our adoption over the last year of the pandemic has been tremendous because we're answering the question of what's around this place, and so people can remove that indecision and they can now find that place and make that call digitally, and then book that showing or virtual showing and then sign that lease.
Mitch Fanning [0:29:25]:
It's something I've said in previous podcast episodes, it's really all the pandemic has done is it's forced owner-operators, landlords to do the things that they should have been doing all the long, just they kind of had to accelerate that. So any other comments before we move on?
Andie Daggett [0:29:41.0]:
I was just also going to touch on the kind of experience at the building, something that I found a lot of the buildings or some buildings that are successful in Calgary are doing is really capitalizing on the fact that many people are on their phones or like Matt said watching Netflix a lot more... We're obviously much more screen oriented than we were before, which is shocking, given that we were very screen or a even before covid, so it's kind of sad, but some buildings are capitalizing on that by really marketing through their Instagram pages, for instance, a building in the belt line in Calgary, Park Central, and I actually just on a bit of an Instagram cleanse right now, but when I was on Instagram, I do follow there, I follow basically all the buildings just to see what's going on, and they did a really great job, especially during intense lockdowns in Calgary, where if you were living at Park Central and of course if you had a public account if you posted a story like Day in the Life at Park Central, their morning routine or the view from their unit, or them at the amenity that they could use appropriately during covid lockdown times, the building would repost that on to their story, so that if you were somebody just living in a city and you follow the park central account, you could see how the people in parental are living, which I think is a great tool to really get people to want to live in your building.
As Pierre was saying, having that, being able to see the experience without actually going to visit the building, are actually living there, you're able to see on your phone, through your social media to see what it would be like, which can obviously really influence renters decisions on where they live, so I found that was a really creative way to attract new renters is just really capitalizing on the Instagram... Look of their building,
Mitch Fanning [0:32:01]:
I couldn't agree more. Ben, did you have a comment there?
Ben Myers [0:32:20]:
The only thing I was gonna say is if developers aren't being transparent or landlords aren't being transparent, they're just gonna lose out that at this point in time, and even during covid that they're actually being irresponsible if you're not putting that amount of information to describe your project in your area and someone's coming to view that unit or going out of their house when they normally wouldn't have because they would have had all the information, you're actually doing a disservice to do your own, you can be increasing the spread of this virus by encouraging people to go out, so I think if you're not putting something on your Rentals.ca listings, it's like you're hiding something, so I certainly encourage everyone to be as forthcoming as possible. And not try to trick people and to come into your building or try to use the magic of your sales agent or leasing agent to get someone to come, but give them all the tools and make them make an informed decision so they're not going online after to complain about you and early near reputation.
Andie Daggett [0:33:02]:
Yeah, it's really forced the industry in that way, we see the real estate industry has had a history of being very secretive, nobody really wants to share their information with anyone, developers talking behind the scenes to one another, but you really don't know if they're telling you the truth, so Covid really forced these developers to have to be transparent and just kinda put the Pride away and just say, Okay, maybe another developer is gonna look on my site and see what's going on, but it doesn't matter to me, I'd rather buy potential buyers or renters see what's happening to be successful, so I think it's forcing that kind of mentality out of the industry, which at the end of the day, I think benefits everyone involved, so it's a good kind of a new trend to come to the real estate industry.
Mitch Fanning [0:33:10.5]:
So as we come to a smooth landing here, when we look ahead, I wanna get your final thoughts, and I guess the question is, what's ahead for the rest of this year? And I'm also gonna add a followup question to that, it's actually a question that I use in my quick-fire round is, as a result of covid, what have you changed your mind about lately? So I'm gonna start with Andie, and the question is, what's ahead for the rest of 2021? And what have you changed your mind about lately?
Andie Daggett [0:33:47.6]:
Great questions. You actually asked a kind of part of this question when we're talking about incentives, and I realized I didn't quite answer, but it was about whether or not incentives are gonna stick around, and so that's part of my answer for what will happen in 2021, especially in Alberta. It's very difficult to get rid of those rental rate incentives, 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, we've seen entire incentives in Alberta since 2016, they really haven't gone away, and that's a function of obviously our economy and all the other things and struggles we've had to get through here, so I do believe that incentives will remain. I think that we were also touching on larger spaces, not with saying larger spaces or functional spaces, we are seeing some buildings come up in Calgary that is gonna offer larger floor plans or just more functional spaces, so offering more the one plus den to have that office space there for you, I think that will continue into 2021, and then what have I changed my mind on I guess I used to be a very pro, still think amenities are very important, I'm gonna touch on amenities, but I used to think you need a lot of amenities to attract these renters because all of these buildings have all these amenities, you really can't launch a belt line project without at least a gym and a social area, you just... Why you're competing with rentals that have a rooftop pool and golf simulators and all these other things, you're just not gonna... You're not going to attract those renters, but my opinion has changed a little bit where I see because of covid, a lot of those amenity spaces that had to shut down or just not operate in the same capacity as they were prior to covid, and a lot of these buildings are charging a premium for those amenities, and so why would you pay that if you're not getting access to that amenity mean, I live in a condo building and an investor on the unit, and so already I'm living in a little bit more of an affordable part of the rental market than the purpose-built rental, but my gym in my building has been closed the whole time I've lived here, it has never been opened. And if I was paying a premium for that, I would be pretty upset and I would look into moving to more of a suburban area where there might be no amenities in the building, but at least I'm not paying for something I can't use. At least my rent is going towards exactly what I'm paying for so I think that's one thing that kinda changed my mind is just the importance of all these amenities, I think it's more important to be selective with them, and I think one thing I was gonna touch on earlier when we were talking about how developers are looking at their space is now an offering more functional or bigger space is offering more outdoor amenity, so rooftop patio, barbecue spaces, making sure some buildings don't even have balconies on some of the units. And I think we're learning now that the importance of being able to go outside with your friends, I mean, I don't know about you, but obviously, a lot of us aren't comfortable or aren't allowed to have people inside of our homes, but we're allowed to see people outside, and if you don't have kind of a social space to do that in your building, I men you go to a park, all the parks are packed because everyone's at the park, 'cause that's all you can do, so it would be nice to just have that private, either a larger balcony off of your unit where you can have a little fire table or something like that, or the outdoor patio spaces where you have some friends over and still feel safe and still enjoy some social gathering, so I do think that more creativity with those amenities spaces and not just popping a gym in and doing all that basic kind of stuff, I think that will happen in 2021 as well.
Mitch Fanning [0:37:25.0]:
Speaking of creativity, and gyms personally, I can't live without my Peloton anymore. So if developers are looking at gyms, they may wanna actually go maybe the other route and just give everyone a Peloton and they're in their unit.
Andie Daggett [0:37:38.3]: Totally, yeah, or rental service or you can rent the Peloton for a month to rent one of those workout mirrors or something, I think that might be an interesting trend as well.
Mitch Fanning [0:37:47.4]: Yeah, exactly. So I'm gonna... Same question, Paul. What's ahead for the rest of 2021? And what have you changed your mind about lately?
Paul Danison [ 0:37:56.3]:
Basically with shots in arms and summer coming, I think people are gonna not only becoming 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, and what I've changed my mind on personally is I could never binge anything before with... When it came to streaming, I'm just too ADHD... And there are good programs like Manor and One Division, I've become a binge-watcher.
Mitch Fanning [0:38:45.4]:
There. Yeah, the F1 series just started on Netflix, so I've been doing a bit of binge-watching late at night. Great response, Matt, same question.
Matt Danison [0:38:58.5]:
I think moving forward for the rest of it's going to take a little longer to get all the shots in the arms, and things in a good place, but I think we're gonna touch in on what a few people touched on earlier incentives are going to get more wild and creative and possibly unique experiences, even it'd be really nice to see some landlords offering maybe matching a months worth of rent that goes to the front line workers or charity of their choice to be a different take on it. And then as far as a personal kind of item that I've changed my thinking on a little bit is just consumption. I've been more aware of consumption overall as far as ordering delivery, and so when you order, delivery it's so convenient and we've gotten used to convenience, which is great, but at the same time, also think about every single delivery that you get, do you really need those plastic spoons, you have spoons and silverware at home. So I saw something for the first time yesterday when I was ordering something for pickup, and it said he gave me the option to not include napkins and forks and utensils, so that was a great thing 'cause this is...
Mitch Fanning [0:40:13.5]:
I can't wait to personally, to actually eat in, I'm dreaming about that day.
Matt Danison [0:40:18.1]:
Really quick. Sorry, Mitch. The other one as far as just on the business front, is that I've changed my mind about has been working remotely. So I didn't think, I was very hesitant, and I loved the office space and jiving with everyone and working things out on the whiteboard, and we had offices in Montreal, Toronto, and Ottawa, and that was a scary thing going into this...and it wouldn't work, and I had some doubts about working remotely with the team, and our team is done exceptional job work remotely and communicating through different chat tools and having meetings throughout the week, so that's something that I've had changed my mind about, and I think going forward we're still trying to figure it out. We're not back to the office as yet but definitely have changed my mind about seeing that it can be done. Also, it'd be interesting how we move forward with the rest of the year and work remotely, if we're gonna try a hybrid approach or just work from there for the rest of the year, that's undetermined still. But definitely nice to see that. Everyone's really done a great job at Rentals.ca working remotely and I'm really, really proud of our team.
Mitch Fanning [0:41:36.2]:
Excellent, Ben same question.
Ben Myers [0:41:41.7]:
Yeah, I mean, in terms of... In my consulting where developers are still looking at building rentals, so the site that I just was working on last week, the developer had 67% of the units being studios, so we're not betting against, the small units quite yet, and I believe that these developers are spending millions and millions of dollars to buy these properties and plan these properties and launch these rental buildings, so if the smart money and the big money is on a return to the downtowns and the... I fundamentally believe that we'll see people move back downtown. I think they wanna be close to friends, they wanna be close to restaurants, they wanna be close to all the amenities and the things that they loved in the time before covid, it will be a little bit slower and for people to feel comfortable doing those things again, but five years from now, hopefully, we'll have forgotten all about covid and we back fully normal with people desiring to be as close to amenities and services as they had before. In terms of my mindset, I don't think a lot has changed in terms of Covid, I was surprised at how quickly the market changed, I really didn't expect to see condo buildings where their average rent decreased by 35% year over year, I certainly never would have predicted that type of massive decline in a single year, but I guess fear of dying can make you make some pretty big decisions in terms of your housing situation, so I hope things get back normal and in terms of my forecasting on see, that's part of what I do for Rentals.ca, a part of what I do for my personal clients, 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. I think we'll have a log jam of people ready to come in, in Toronto, as you know, we have the highest percentage of adults living with their parents, and I think if you live with your parents, during a pandemic, I think this will be the time you decide you know I'm gonna push the budget, I'm gonna go out there and rent something and I'm gonna, you know no more failure to launch and I'm gonna get out there and do something, so those are kind of the trends that I'm looking for or for the end of 2021 and in 2022.
Mitch Fanning [0:44:18]:
Pierre Calzadilla [0:44:20.7]:
I think Ben nailed it on the head there. Of course, being the expert that he is, developers are still building and they're still going out, and I think what they've learned for the rest of 2021 as they go forward, and the same thing that society... And this is a sorta combo answer that I've learned, is just the importance of the exterior, like something in the data that we saw was that while we saw transit and grocery swap on the other side of the coin cafes, restaurants and parks all increased about 10%. And so people are seeing these things matter now, right, where before, when you're stuck at home outside became much more important, and so you started to realize the value of that exterior of like if you can't go to work and you're at stuck home and you're stuck like, What are you doing right. And 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, and I think on a like personal front, oh man, I have children, and being in a pandemic with children stuck at home is rough, and I think that I have a lot more love for, that I have, and I didn't lose any. I didn't not like teachers, but I was like, Oh my god, teachers are great, schools are great. Let's make sure that we schools and teachers are funded and they have what they need, and let's make sure that we're thinking in a work from home culture, I think what's developing here and work from home, I think people also wanna go into the office, I think there's... The office is not dead, the office is not dead. I myself look forward to going to the office once a week for a change of scenery, also to be a little bit away from my children sometimes, and to get that space to think and breathe, and so I think that things like we work or things like these kinds of flex spaces and through that are really gonna matter still, I think that people still will go to an office, I think that relationship with your office is gonna change tremendously, and that's what we're doing in our company, I think Matt's point on people out of the country, look at we have employees that we've hired out of the market that is waiting to come here once restrictions lift. So this is all true. So I think there's a huge influx of people coming to Canada, I think that jobs are preparing themselves for this flex environment where they're gonna have an office, but they're also gonna make it easy for their people to work from home, and therefore the people who work from home are really gonna think about the outside their four walls as much as inside their four walls, and I think those are the things that I see in 2021 and beyond that are sticking.
Mitch Fanning [0:47:14]:
I think that's a perfect point to end on... I mean, that's it, I think that's it. And we've covered it all. Thank you guys for taking the time to do this. Yeah, that's it for another episode.