The year 2020 marked a seismic shift in life as we once knew it - industry sectors had to adapt to survive, and property management was no exception. The pandemic has certainly thrown the market through many loops, forcing owners and property managers to find new ways of handling their business effectively and efficiently.
Now that 2021 is well underway and the world is slowly but surely taking control back from the pandemic, which key trends will continue to impact property management moving forwards?
1. Ongoing government restrictions
Governments had to take drastic measures due to Covid, issuing many precautionary memorandums to protect and support tenants during the surge in unemployment. With eviction restrictions continuing into 2021, property managers have been finding it difficult to manage their profitability and portfolio growth.
Across the U.S., the majority of states prohibited evictions, whilst continuous changes to building regulations and codes stopped construction and ongoing renovation in its tracks.
As the economy recovers in 2021, it is expected that the demand for rentals will increase, however, the ongoing increase of market regulations will likely lead to a rise in urban rental prices.
2. Enter the property era of Gen Z
Adapting to a generational shift and the diversity of housing demands that accompany it will become a key focus for property management in 2021.
For the last decade, Millennials have dominated the market, the oldest of which (at 39 years old) are planning to become homeowners in the coming few years. But, the coming decade will also see an exponential increase of 6% in the Gen Z population (rising from 8 - 51 million). Gen Z-ers comprise a third of the workforce and population of renters and property managers need to prepare to cater to their modern needs.
Gen Z (or true digital natives) rely heavily on the digital world and social media for making their lifestyle decisions and purchases. As a property manager, maintaining a smooth digital experience for tenants has never been more important.
3. The rise of technology
As well as preparing for new, tech-savvy generations to enter the market, Covid has demanded that property managers implement smart automation and intelligent tools to stay well connected with prospective clients, tenants, and staff in the here and now.
Here are some leading property management technologies that are here to stay:
Artificial intelligence (AI)
AI-powered chatbots can respond automatically to a tenant’s inquiry, including from 3rd party websites, and pre-screen any prospects before booking tours automatically. This automated intelligence can increase property management efficiency by handling as much as 75% of queries on a management team’s behalf.
Cloud computing has been rapidly progressing in the property industry, making manager’s lives significantly easier by increasing their mobility and thus, their efficiency. Owners and tenants can use their credentials to access property and financial information on the go, as well as receiving regular updates regarding rent payments, lease and contact information, lead reports, and more.
The virtual reality market is expected to rise to almost $21 billion by 2025, and as the pandemic conditions accelerated the rate of this growth, property managers had no choice but to follow suit. Relying heavily on direct communication, most property managers made the switch to live or virtual viewings in 2020, and with 82% of Millennials favoring 3D property tours and high-quality, digitally immersive experiences, it's an inevitable adoption of technology that will maintain its worth moving forwards.
High demand for rental properties
Despite a 3% rise in national average rents across the U.S., according to the 2021 Buildium Property Management Industry Report, over 80% of current renters plan to continue renting instead of making the shift into homeownership in 2021.
Although a significant number of Millennials were expected to become homeowners in 2021, the pandemic has made it tough for many, and the majority are currently opting for lease renewal this year, with only 17.1% planning on buying a home in the next 12 months. Gen Z renters also largely plan on continuing to rent, with just 12.8% intending on a house purchase in the coming year.
And the sector is experiencing much the same in Canada, with a surging number of leases being reported with sizable year-on-year growths. The Toronto Regional Real Estate Board (TRREB) reported over 13,000 registered leases in the GTA in Q1 of 2021. Predominantly within the low-rise housing and apartment condominium categories, this figure is almost double that of the previous year’s figure of 7,251.
With rising leases and average rents down, though, it’s only a matter of time before something has to give. As property expert Sabine Ghali from Buttonwood.ca Toronto Property Management says, “If the rental demand increases continue through 2021, it will almost inevitably place upward pressure upon rent prices, as the supply of rentals is unlikely to be able to keep up with such high demand.”
Either way, rental demand is an essential component for strategically planning how to grow property management portfolios. These demands are spelling out a strong sector recovery as the conditions of the pandemic fade into the background.
The bottom line
Despite the challenges, Covid-19 has forced improvements in relationships between owners, tenants, and property managers, as the sector has been forced to adapt and find new ways to connect and provide remote, streamlined services.
With rental demands strong as we move out of the era of Covid, property managers must strive to keep up with the latest property management trends and evolve with the ever-changing demands of progressive consumers.