Landlords adjust to COVID-19, mull the future of area rental market
As the academic year nears its close — despite schools and campuses being physically closed since early March — the summer and fall seasons usually usher in a migration of new and returning students to the Charlottesville area. With a rental market, often driven by the University of Virginia, many leases expire or renew over the summer, even for non-student tenants. This year, as the COVID-19 pandemic continues and students wonder what their fall semester will look like, many landlords wonder what that means for their rental properties.
According to locally-owned property management company Management Services Corp., the leasing and renewal process for its student properties began in October 2019, and while they had been on track for leasing goals, they have noted a slowdown.
“Before March, we were fortunate to be ahead of our lease-up goals for the 2020-2021 academic year,” said digital marketing manager Stephen Colvin. “Since March, we have seen a decrease in leasing activity. Students continue to sign leases for the fall, but velocity has declined precipitously since March 16.”
Projecting what shape the rental market takes in the coming months depends on various factors, and, for the time being, landlords are more focused on the present needs of their residents and taking care of their staff and contractors.
“Providing housing to a community under a Stay-at-Home order is an essential responsibility that we do not take lightly,” Colvin said. “We continue to receive service requests from residents, and our maintenance team is equipped to run these work orders safely.”
Like many other businesses, staff that can work remotely are doing so, but COVID has resulted in some staffing changes.
“To date, we have retained 100% of our full-time team members. Unfortunately, where facilities have been closed as a result of the governor’s COVID-related restrictions, we have had to reduce part-time roles,” Colvin said. “As we look ahead to summer, we are hiring seasonal help to prepare for move-in season and rehiring a number of individuals whose part-time positions were limited due to facility closures.”
As such, MSC has applied for the federal Paycheck Protection Program, part of the U.S. Congress’ CARES Act that passed last month.
By late March, MSC reached out to their residents to offer payment plan options, including the option to defer payment for those most affected financially by the pandemic.
“We expect that April may be a more challenging month for many of our residents, and we are working with each resident who contacts us to help them in every way we can,” Colvin said.
Meanwhile, Woodard Properties, which manages residential, commercial and income-restricted properties in town has also been adapting to the financial impact of COVID-19 on its leaseholders.
“All of our customers have been impacted, each in a different way. We are working with our residents and tenants on an individualized, case-by-case basis,” said Joy Waring, director of marketing. “Sometimes that means helping them find assistance programs, sometimes working with them on a payment plan or even helping promote our local commercial businesses.
Woodard Properties has also created a resource page on its site with information on the commercial leases, such as those at McIntire Plaza, Market Square and the Downtown Mall. As for its student-targeted properties, Waring says rental and renewal trends are similar to recent years. At this time, Woodard Properties is not projecting a significant loss of funds for its student portfolio, due to the fact that current tenants still are paying rent and have not alerted them otherwise, but the company will be fluid and ready to respond should anything change.
“Like many businesses, we will navigate through this event week-by-week and remain ready to react and respond in the best way possible to each new scenario and circumstance,” Waring said.
Waring says the company hopes that schools will be able to reopen campuses for the next academic year. Like the students, they will have a watchful eye in coming weeks for updates.
“If in the coming weeks we find that UVa and [Piedmont Virginia Community College] will be continuing online classes for the fall semester, we will evaluate our options and respond accordingly,” she explained.
Waring noted that outside of Woodard’s tenants, vendors and contractors “counting on” them, the management company has expenses to keep operations going — like mortgages, insurance, property taxes, utilities, property maintenance, as well as employee payroll and health care.
“We are constantly evaluating how to manage our income and expenses in order to best serve our customers, employees, contractors, vendors and community members at large. It is a constant balancing act as we navigate through these extraordinary times,” Waring explained.
MSC and Woodard Properties are not alone in finding ways to work with their residents. Like many landlords, Oliver Platts-Mills, who co-owns and operates 6th & Dice LLC, has been in contact with his residents to check in on rent payment as well as coordinating new ways to handle maintenance in this time of social distancing.
Platts-Mills owns and manages 21 apartments within 7 properties in Charlottesville. Platts-Mills, who is on the Charlottesville Tomorrow Board of Directors, handles most maintenance requests himself like replacing heating and cooling system filters and fixing toilets or washing machines. In the past month, those maintenance operations have had to be adjusted. Platts-Mills says communication has been crucial to ensuring safety of residents.
“No one wants me to come into their apartment, and I don’t really want to go into their apartment,” Platts-Mills said. “It’s meant increased communication. My tenants have been great. I’ve been into three apartments in the past month and everyone agreed to go on a walk to leave the apartment empty. I wore a mask and entered without someone in the apartment.”
He explained that some residents have been able to handle their own minor maintenance issues on their own, but with his assistance. Platts-Mills cited an example where he left a new air filter and ladder at a tenant’s door, or how he spent time on the phone diagnosing a mechanical issue. For concerns that require a subcontractor, Platts-Mills makes certain there is ample communication to keep staff and tenants safe.
As for projected rentals and potential COVID impact, Platts-Mills said he is fortunate that his tenants are remaining safe in their homes and able to pay their rents, but he is expecting that may not be possible for everyone.
“We haven’t yet seen anyone reaching out about difficulty, but I am expecting that to happen,” Platts-Mills said.
Given that some of his tenants are graduate students and some have subsidized rent, he noted the possibility for rent-payment to become a challenge.
“As this [COVID-19] drags on, they may run into issues,” he said.
In the meantime, while Platts-Mills tenants are safely in their homes, and some have been able to be hands-on with their own maintenance, Platts-Mills and his wife are in the midst of filling a lease for an upcoming vacancy.
“Usually at this time there would be a much higher demand than there appears to be right now,” he explained. “There’s a lot less traffic. We reduced the rent we were asking to entice people in.”
While so much seems uncertain across many sectors amidst the pandemic, Platts-Mills thinks that one certainty could be altered going forward— the cycle of concrete lease dates in mid-summer.
“People are forced to say here until the order ends,” Platts-Mills said. “In the fall when things open up, people may start moving around again. We will break some of that ‘everything has to be in June or July.’”