Profimex Market Review Update – January 28, 2021
More Than $57 Billion in Uncollected Rent Putting the Squeeze on Apartment Landlords
According to a survey by the U.S. Census Bureau, nearly 10 million households or 18% of apartment renters in the U.S. are behind on their rent. On average, a renter behind on rent is behind by nearly 4 months and $5,600. Nationwide renters owe approximately $57.3 billion to their landlords as of January. The December relief package provided $25 billion in rent relief and President Biden’s stimulus plan, currently held up in Congress, is expected to provide an additional $25 billion. Without government stimulus the burden falls on the landlords, as rents continue to fall, and evictions remain impossible for now and difficult thereafter. Banks have been wearier of the multifamily market, with 16.9% of multifamily bank debt categorized as high-risk, compared to just 4.6% pre-pandemic. Investors have taken notice as well, with many publicly traded REIT’s falling in stock value.
Renters Have New Priorities for Apartment Amenities
Renters have changed the way they prioritize apartment amenities according to a survey conducted by Package Concierge on more than 2,000 apartment residents. Accordingly, over 90% of those actively searching for a new apartment say that amenities will be a key factor in their search. Given the life altering way we used our apartments in 2020 it is not surprising that among the top amenities listed by renters were package management systems, smart home alarm and thermostat systems, gym and recreation facilities, outdoor dining, and pet amenities. Among the wish list, an effective package management system takes the cake; one third of renters say their building upgraded the way they manage packages, either with the use of additional technology or additional staff. Still 20% of renters say they are not satisfied with the way their building handles packages. Additionally, research from Newmark found that multifamily owners are increasing their floorplans from a standard of 65 feet to 75 feet to create more flexibility for tenants in the space.