“Utilizing Tech in Leasing”

by Andrew Dealy, Managing Partner

If you're faced with the task of renting a new apartment or house in the post COVID-19 world, your initial search process looks pretty similar to how it would have at this time last year.  Load basic parameters into a search engine such as Zillow, HotPads, or Apartments.com before reaching out to the leasing agents that represent the units that match your criteria.  Assuming that you're satisfied with the answers to your screening questions, you would then set up a time to walk the space. But that's where the new reality of renting sets in.  

The days of bringing 5 people with you to check out a number of apartments in one day are over, at least for the foreseeable future.  Management companies have had to adjust to the challenges that the shelter-in-place orders ushered in and technology has become a vital part of every leasing operation.  These companies are now focusing on direct marketing campaigns and virtual tours, and occupancy levels are more dependent on this capability than ever before.  

There were signs that the leasing industry was already moving in this direction prior to being required to by law earlier this year.  International clients have long relied on virtual tours out of necessity, particularly in major cosmopolitan cities such as NYC, Los Angeles, or Miami.  Millennial renters are also more tech savvy than previous generations and report that they actually prefer less human interaction throughout all phases of leasing.  

COVID certainly accelerated this shift, and the statistics from March-April reflected that in a significant way.   As stay-at-home orders permeated across the country in March, Zillow reported that online tours increased by 188% compared to February.  On StreetEasy, the number of listings with virtual tours also jumped 132% from March to April.  But that didn't mean that all management companies were facilitating these tours, nor that all virtual tours offered the same user experience.  

Naturally, we wanted to know how our own management teams were handling this surge, and particularly as it pertained to our two active listings.   Our first SFR development outside of Minneapolis found itself with 10 houses left to lease just as Minnesota's shutdown order was instituted.  The stakes were especially high there as the effects of COVID-19 led to a increase in demand for our product and we were under contract to sell the entire community based on its stabilization.  

Simultaneously in Chicago, we gained our Certificate of Occupancy for a 38 unit apartment building right as Illinois restricted all non essential business.  We had 0 leases in hand and a construction loan that was becoming due without any cash flow to help pay down our balance.  

Thankfully, in both instances our management partners moved quickly to produce and market updated virtual tours that closely mimicked a traditional walk through.  They were also able to grant remote access through smart lock technology, which helped to eliminate almost all human interaction along the way.  In the case of our SFR community, all remaining houses were leased by the end of May.  In Chicago, we signed 14 leases by the end of April and we were able to alleviate the pressure from that expiring loan. 

These are just personal anecdotes but they speak to the ways in which property management is evolving.  It is likely that the leasing industry will never have the same reliance on agents and in-person tours in the manner that it did prior to the pandemic.  Management companies will continue to divert more resources away from traditional marketing and leasing tactics in order to invest in more technical solutions. 

Developers and sponsors will then gravitate toward the most adaptable management companies because the strength of every project depends on attracting tenants throughout these challenging times.  We understand that the importance of selecting a tech forward management partner has never been greater, and the amount of thought that we put into that determination going forward will reflect this.

Andrew Dealy, Steel City Management LLC