A-Class Building. How do we keep them full during a pandemic?

Question

What are you doing to keep your A-class apartment building full during the pandemic? I am located in Los Angeles, California and we are still not fully open. As a result, people are working remotely and relocating to wherever they prefer to be. There is a ton of turnover. I am a property manager and may have an opportunity to manage an A-Class 34 unit apartment building that has 8 vacancies. All moved out within the last 180 days and are sitting with little activity. My goal would be to get the building leased to qualified tenants quickly. Besides lowering the rents (no owner wants to hear that), any tips on what can be done to get the units leased fast and any tips on keeping occupancy at 100%?

My first thought is to focus on retention by hosting fun but "social-distancing" community events such as a complimentary fitness class via Zoom (since gyms are still closed). And, also doing Instacart grocery raffle giveaways since people are trying to avoid entering grocery stores. 2) Offer 6-month lease terms to prospective renters that do not want to commit long-term due to uncertainty, 3) Propose furnishing two units and offering short-term corporate rentals, 4) in place of lowering the rents offer a two-month free rent concession on an 18-month lease term.

In addition to the pandemic being a hurdle to leasing these luxury units, there is construction next door to the building that will not be finished for another year.

They already have virtual tours in place and cool perks like Amazon and dry cleaning lockers. Besides capturing every lead by getting them to tour, what can be done from a management standpoint to maximize occupancy?

This market is tough, and if I am going to take on this building, with a great action plan, I can turn it around and have it perform to its full potential. In advance, thanks for any tips!

Scott Mac · Answer

Hi Melody,

The construction is probably a big part of the move outs (it may be a terrible problem for your residents at certain times of the day or certain days). Pile drivers, cement trucks, cranes, jack hammers, endless pounding and endless buzz saws, (and loud mariachi music from boom boxes, which I actually like, but not everyone does--some of these guys really crank it up), etc...

A good first move might be to talk to as many of the existing residents as possible and try to figure out what their pain points are, and why their neighbors moved out, vs. shooting in the dark for solutions based on guesses.

Some talented Texas Mariachis: https://www.youtube.com/watch?v=4NkAaYDDnoY

Just my 2 cents.

Melody R. · Answer

@Scott Mac, I absolutely loved your "2 cents"! It seems obvious, but I did not even think to talk to the current residents. After speaking with them, I learned many things about the building that I cannot find through normal search avenues. This will now always be one of my first go-to's. Thank you again, Scott, for taking the time to comment.

John Casmon · Answer

Are you getting a lot of traffic, but struggling to convert it into leases? If so, you should ask them why they didn’t lease with you. Sometimes the pics look great, but if they see a construction site they may not be willing to pay a premium. If the traffic is not strong, you need to lower the rents.

The tactics you are employing work great for retention. Also, do you allow pets? If so, make them truly pet friendly and offer amenities that cater to the four-legged family members.

John Warren · Answer

@Melody Rault I feel like all the things you are thinking about will not affect the one basic issue. These units must be over priced. Have the honest conversation with the owners that you will need to temporarily adjust pricing downward, but in the long term you should be able to drive rents up as things normalize. They already will know this is coming, and you can be the PM that delivers honest news.

John Warren · Answer

@Melody Rault glad I could help! Pricing isn't the thing people want to hear, but if you do the math on vacant units versus a price reduction it makes sense to price things competitively every time. I hope this project works out well for you. You definitely took the time to figure this one out which not every PM does!

Melody R. · Answer

@Laticia Braxton Thank you for your suggestion to add move-in specials. They already had concessions in place. I suggested they fine-tune them a bit. For example, instead of offering "One Month Free", offer one month free if an application is submitted within 48 hours of viewing the apartment.  I proposed offering giveaways such as reimbursing up to $500 of moving costs, apartment cleaning vouchers, etc.

Brandon Vukelich · Answer

I had experience managing nearly 300 units in the Seattle area.  I agree with most comments above regarding rates.  Check your comps in the area. I feel that the biggest part of marketing rentals is price.  Show your property owner the data.  If you are priced in line with competition, there is something else that is deterring applicants and it's probably the construction...or lack of parking, homeless people sleeping outside the building or ???  Shorter lease terms are attractive and provide flexibility. Consider the total move in costs compared to your competition. Maybe lower security deposits or cleaning fees a bit, or offer half off last month, not the first.  Best wishes on your journey!

Evan Polaski · Answer

@Melody Rault  What is the ad spend on advertising? Apartments.com, zillow, billboards, etc?  Price may be the factor, but if you the only marketing is a "for rent" sign taped inside a window, then people likely don't even know they are available.

That being said, if there is a healthy ad spend and lots of eyes are hitting the listings, then you are back to price.

Erik Hatch · Answer

@Melody Rault

@John Warren is correct  in my opinion that price is the issue. People are finding other options these days. I watched the news this morning and it was reported the New York City now has over 13,000+ vacancies. People are fleeing to the burbs or to another more tax friendly state. Its happening in the Chicagoland area too. So is this a short term phenomena? Does this present a buying opportunity for properties with low vacancy? One needs to think supply and demand.

Laticia Braxton · Answer

@John Warren Agreed.  You should offer as many amenities and perks as possible to remain competitive, but it probably won't get prospects to lease your units.  Suggest offering a rent concession (first month free, last month free, etc.)  If they don't like that idea, offer a 13 month lease.  The renter will still see the value.

A-Class Building. How do we keep them full during a pandemic?

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