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Real estate managers take the measure of COVID-19: part 1

In this two-part series, we asked real estate managers to provide their takes--multifamily and commercial--on Emerging Trends in Real Estate 2021, the annual state of the industry report from PwC and the Urban Land Institute. In Part 1 we tackle the multifamily view with Barry Blanton, CPM®, IREM’s 2021 president-elect and founder of Blanton Turner AMO® in Seattle. Blanton Turner deals primarily in urban mixed-use assets.

JS: Let’s start with your own experience through the pandemic, Barry. How did Blanton Turner fare in terms of rent collections?

BB: We had anticipated that rent collections would’ve taken a much harder turn than they did. Our collections were very high prior to COVID, and they probably dipped about seven or eight percent by June of last year. In the scope of things, that’s great. Our occupancy is down from about 97 percent to about 92 or 93. 

The unfortunate side to this is that we have an affordable housing component in most of our properties, and collections for that small percentage are in much more dire straits, because they simply can’t afford the rents. We don’t want anyone losing their homes, and with the eviction moratorium in place anyway, our approach is to stay in touch with people and serve as much as possible as a conduit between those people who cannot pay, and the resources they may need or not know about. 

JS: And what are you hearing from other property managers?

BB: Generally speaking, I think most people agree that collections are better than they were expecting. Still, the most vulnerable of the population are getting hit the hardest, and to that end everyone is trying everything they can to help those people get the resources they need. 

JS: Emerging Trends talks about the rise of such COVID-focused practices as online tours. It states that such practices may revert to in-person activities in time but “online interaction will be acceptable in most cases.” Do you agree, and in what way?

BB: I have the luxury of hindsight because when this report was written, the world was significantly different than today. They didn’t know the outcome of the election or the arrival date for vaccines. So, I agree with the sentiment at that time, and as I read it, both approaches would be acceptable. But I don’t think that’s the way the world will be from here on out. I foresee a hybrid of both in-person and online activities.

I don’t tend to think in terms of what’s acceptable. I tend to focus on the exceptional. I was on three phone calls this week, and more than 20 Zoom calls. We find ourselves in an era when we went from wondering what Zoom was, to being nearly possessed by it. A teleconference seems almost unacceptable now. But even videoconferences could be a less acceptable way of interacting than in-person meetings in specific circumstances. The good news is that, in the future, we’ll have choices for interacting, either in-person or virtually, and there’s value in both.

JS: Here’s another quote from Emerging Trends: “Clearly, the nature of demand remains unaltered. In sheer numbers of people, at least three adult generational cohorts, births, and household formation patterns . . . still apply. Moreover, those fundamentals still suggest a compelling . . . hypothesis for more geographically diverse and more attainably priced multifamily development.” Thoughts?

BB: The pent-up demand is true. Some of the variables have changed. This past year has seen a simultaneous recession and hyper-progression, as in technology and how people are going to incorporate life with work. Seattle is fundamentally still closed, so we essentially took our package of amenities--the restaurants and ability to walk to work and socialize--and shut them down. Much of our population was made up of younger tech workers, who were paying very high prices for some very small units just to take advantage of those amenities.

We experienced an abrupt stop, but the re-opening of urban America isn’t going to be quite as abrupt. Eventually, the pent-up urban demand will return. Baby boomers are ready to retire. Millennials can buy homes and take advantage of currently low interest rates. But we have Gen Z entering the workforce, and they’ll be the next generation to come when jobs are back downtown. 

JS: One more quote: “One CEO of a multiregional multifamily portfolio of properties [says]: ‘COVID-19 overshadows everything else.’ To him, it is fruitless to think about what lies ahead until people achieve a different relationship with COVID.”

BB: I know some people who hunkered down. It was almost a necessity upfront as we reacted to the suddenness of the pandemic. But that’s not the way out. 

When we were working on the Pandemic Guide for Real Estate Managers, one of the conversations we had revolved around how we were going to come out of this, and what recovery and renewal would look like. There are still variables, but we must hit the ground running. Property managers need to react. That’s the nature of the profession. But we also need to ask ourselves how to proactively maneuver successfully so we come out well in the end. 

JS: What were your major takeaways from reading Emerging Trends? 

BB: First and foremost, the writers had the unenviable task of creating a trends report in the middle of all variables shifting around us, and good on them. They did it, and it’s always a great read. 

Now that we have some closure on the election and the coming vaccines, much has already changed. We’ve experienced the biggest hit to our economy and our culture that I’ve ever lived through, and much of our conventional wisdom has also changed. 

If there is a silver lining, it’s the value we place on working together, and this is still a people business. It’s not about just making a salary. We can do that, but we won’t be happy. We need each other, and we need each other in a face-to-face, in-person context, even if we maintain hybrid applications as an option. With all the challenges we’ve faced, it’s been remarkable to me to see how adaptive people were to those challenges. There’s a great commonality among people, not just in the U.S., but on a global basis. We need each other. We are the silver lining. 

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