The current pandemic and global response is a once-in-a-lifetime event that has affected all of our lives in significant ways. In addition to rapidly addressing the short-term implications, real estate leaders must begin to think strategically about the long-term implications of the event. As MIT Technology Review’s Gideon Lichfield wrote, “We’re not going back to normal.”
From my vantage point working with multifamily owners to anticipate changing resident demands, the following are five developments that I predict will accelerate in the future, post-pandemic age. Beneath each trend lies an opportunity for owners and operators to capture in the coming years.
1. Increased Adoption Of Delivery Services
Prediction: The percentage of residents who shop online for necessities will increase, with online grocers seeing the largest percentage of new adopters. Online grocery apps are being downloaded at record-breaking rates. This trend will continue and be a lasting change in the new normal.
Opportunity: Multifamily owners who adjust their operations to best receive and distribute a variety of packages (including perishables and high value) to residents will be at an advantage. The e-commerce boom and resulting increase of packages has been an existing logistical issue for multifamily owners. While smart package mailrooms are part of the solution, it will be increasingly valuable to create additional layers of service to ensure safety and cleanliness, particularly for perishable items.
2. Remote Working Acceleration
Prediction: Remote working will become more widely accepted and employers will increasingly need agile real estate strategies that maximize value and flexibility. Many of us have had too many Zoom calls to remember in the past few weeks. This personal experience is indicative of widespread adoption. In the midst of a chaotic time, tools for remote work have proven reliable for many. This short-term success of remote working coupled with companies’ need for flexible real estate strategies will accelerate the acceptance of remote work.
Opportunity: Residents who are working remotely for a portion of their workweek will desire a third space outside of the home, so multifamily owners who operate a workspace in their buildings will create a competitive advantage. A workspace offering will add the most value when it goes beyond providing a basic space and chooses to align itself directly with end-user needs, such as bookable meeting rooms, programming and events.
3. Automated Public Spaces
Prediction: A general shift in social norms and social behaviors will increase the use of automation in public spaces. Implementation of all types of touchless technology will increase, from automatic doors to voice-activated elevators to hands-free light switches.
Opportunity: Owners who are adept and first to market at retrofitting and adding these smart elements to their buildings will have an advantage. How operators strike the right balance of frictionless automation with human-centered hospitality will be key.
4. Increased Importance Of Property Management
Prediction: As residents spend more time at home, they will expect more from property management, and the importance of service, cleanliness and reliability will increase. Over time, brand recognition of property management companies will increase and more substantially differentiate one multifamily asset from its competitive set.
Opportunity: Multifamily owners who build a strong consumer-facing brand based on operational consistency will have an advantage. Owners who add additional layers of service, whether provided through an affiliated third party or in-house, will achieve further differentiation, especially in class A multifamily.
5. Human Connection Becomes Increasingly Valuable
Prediction: The core mission of my company is to draw people out of isolation, which makes this trend particularly important to me. As society moves from wide-spread quarantine to the new social norms, the already existing loneliness epidemic will, unfortunately, continue to grow. In 2018, three in five adults (61%) reported feeling loneliness in the well-documented Cigna study. Tragically, we expect this percentage to rise, which may have serious health implications.
Opportunity: Multifamily owners who create operational rhythms for resident connection before, during and after work will attract and retain a disproportionately large number of residents. This operation likely functions similar to a hotel bar, drawing residents out of units and into a space with opportunities for connection. The current lobby and first-floor amenity space is the ideal location of this connection hub. As technology continues to remove friction and human interaction from the consumer experience, people will be more hungry than ever for human interaction. Buildings and operations that can provide places of connection will be in high demand.
In the age after the pandemic, customer-centric sensibility will be critical to best position existing assets in what will be a more competitive landscape. Winston Churchill famously said, “We shape our buildings, and afterwards our buildings shape us.” The coronavirus will more than likely shape us in such a way that our buildings and operations will need to be reshaped. Multifamily owners and operators who are best positioned to address the change in behavior will not only be good for society, but will perform the best in the new normal.
Despite the challenges, Edmonton area real estate values 'have held up extraordinarily well' – Edmonton Journal
I have to say the Edmonton area real estate market has surprised me.
When you consider the onslaught we have had in the past five years — oil price crash, more than 100,000 job losses, fires, floods, domestic and international trade disputes and then COVID-19, I would say the Edmonton and area real estate values have held up extraordinarily well.
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Since 2014, we’ve only seen modest declines in prices, with single family homes declining the least. Edmonton remains Canada’s most affordable major city with one of the highest average incomes.
Other Canadian cities have seen significant price gains in the same time period creating a bigger difference in real estate values between regions. We have had clients who can work anywhere and chose Edmonton as they can afford much nicer living quarters here for the same money.
Given the lower prices and interest rates combined with rising rental demand, it is easier for investors to get positive cash flows. We are seeing investors looking at condos for their positive cash flow. This fact will help to support our real estate values.
Toronto and Vancouver Real Estate Inventory May Get A Boost From AirBNB Slowdown – Better Dwelling
Canadian real estate markets may be getting another inventory headwind soon. National Bank of Canada (NBC) research estimates AirBNB hosts may contribute to oversupply later this year. As the slowdown impacts hosts, many may be incentivized to sell. By their estimates, just a quarter of hosts selling would cause inventory in cities like Toronto and Vancouver to swell.
AirBNB and Housing Inventory
AirBNB helps homeowners take existing housing stock and convert it to short-term rentals. Rather than staying in hotels, travelers can now stay in existing non-hotel stock. At first, it wasn’t a big issue when just a few people were doing it. As the platform expanded, people began buying additional housing just to operate short-term rentals. By repurposing housing that would otherwise be long-term units, cities now need additional housing. Basically, short-term rentals lead to an inventory squeeze, pushing rents and prices higher. Temporarily at least, for as long as the squeeze persists. That squeeze could end as quickly as travel did.
The Travel Industry Expects A Big Slowdown
The travel industry doesn’t expect travel to recover quickly from the pandemic. The US has approved some routes cutting plane traffic up to 90% until September. The IATA, the trade association for international airlines, also doesn’t see traffic returning to 2019 levels until at least 2023 – at the earliest. What does this mean? Fewer users of short-term rentals, and more competition from hotels for those travelers. All of this can have a big impact on real estate inventory, according to NBC numbers.
Canada’s Biggest Real Estate Markets May See Inventory Spike
If just a quarter of AirBNB inventory is sold off, NBC sees a lot more real estate listings on the market. In Vancouver, the bank estimates real estate listings would rise 12%. Montreal would see an increase of 27% in resale listings. Toronto is another story though, with inventory forecasted to rise a whopping 34%. That’s with just 25% of AirBNB exiting as hosts.
AirBNB Boost To Canadian Real Estate Inventory
The potential increase in real estate listings if 25% of AirBNB properties were listed for sale.
Source: National Bank of Canada, Better Dwelling.
The boost is another headwind for inventory rising later in the year. Inventory was already expected to rise in the coming few months. NBC economists believe this would be “exacerbating oversupply in the coming months.”
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How Is The Real Estate Market In Muskoka Post COVID19 – Hunters Bay Radio
In a brand new video podcast series, Gerry Lantaigne with Sutton Group – Muskoka Realty discuses the world of real estate in Muskoka during the Coronavirus pandemic.
Join Gerry every month as he updates you on The State of Real Estate
Watch the inaugural episode here:
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