In 2020, almost all our assumptions about how we use and interact with real estate have been turned on their head. COVID-19 has forced rapid change to workplaces and reduced people’s already shrinking desire to commit to taking spaces that they might not need in the near future.
To cope with such change, additional investment in technology and flexibility from property owners is vital, Yardi Systems International Vice President Neal Gemassmer said. As in the commercial property sector, a residential landlord needs to provide a better user experience during the leasing cycle, greater flexibility in leasing options, and investments in placemaking to incorporate residents’ post-pandemic lifestyles.
“The residential sector, including PRS, Build to Rent and student accommodation, has largely had a manual, disconnected approach to leasing and limited flexible rental options,” Gemassmer said. “COVID has accelerated the urgency for landlords to adopt technology to enable a better customer experience, including online viewings, leasing, resident services and greater flexibility on leasing terms.”
The What And How Of Flexible Resi Leases
Flexibility in the residential sector falls into two parts: Firstly, what exactly is being leased and, secondly, how it is leased. In terms of the ‘what’, sectors such as PRS and BTR have been increasing residents’ desire for more options. Many large UK investors now recognise that the percentage of household ownership in the UK continues to fall and the demand for more amenity-rich residential options increases. Alongside rising house prices, lifestyle changes mean that while some residents still want a traditional long-term lease, others prefer a short-term rental with services such as a concierge.
“The result that we’re witnessing is residential developers being more strategic in the type of properties that they are bringing to market,” Gemassmer said. “In developments it is already common for the estate to include a combination of different types of home, such as traditional flats for sale, long-term conventional leasing and a BTR offering that includes services such as a gym and concierge and a blend of retail and flexible workspace.”
In the student accommodation sector, there is demand from landlords as well as residents to have greater flexibility on the duration of a lease and whether units can be rented out on a short-term basis during off-term periods, Gemassmer said. Traditionally, students commit to rent a place for a term or year, with set move-in and out dates. As a result of the global pandemic, students have far less certainty around whether they’ll need to rent accommodation or study from home. They won’t be able to pay a year in advance for accommodation they might not use.
Moving on to ‘how’ space is leased, tools are now available to make this both simpler and distanced. Software platforms such as Yardi’s RENTCafé CRM Flex allow a landlord to manage multiple lease formats while providing residents with an effective way to communicate with landlords. Since COVID-19 arrived, Yardi has been receiving more interest from property owners that want to move to a more frictionless method of managing space, improving the customer journey and increasing service options.
“Historically real estate has been very paper-based,” Gemassmer said. “To rent a unit, you had to visit a letting agency, pay an application fee and sign paper-based contracts. The sector needs to accelerate the process of digitization and transition to online processes, such as for signing leases, taking online payments and obtaining a digital key for access. So many other sectors are ahead. Take the travel sector; you used to visit an airline office to book a flight, then secure a hotel separately. Now you can book your entire holiday online in one place.”
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Adding The Office To The Home
As property developers start to react to lifestyle and societal change, providing a workspace within an apartment building could offer an even greater level of flexibility to residents. Many large corporates such as NatWest Group and Aberdeen Standard Life have announced they are gearing up for a prolonged period of homeworking for the majority of staff.
“COVID-19 has forced everyone to accept the ability to work from home and be flexible,” Gemassmer said. “Any company that has resisted that until now has been proven otherwise. That will create greater demand from employees to provide flexibility. It is increasingly common to include an area of flexible workspace in an apartment building. Property investors recognise that providing a variety of unique spaces will create the flexibility residents need.”
Providing workspaces as well as a wider variety of residential spaces could pose problems for developers that are nearing completion of units. Can they alter the physical space to offer greater flexibility? A second challenge could be legislative. Does a city allow short-term rentals? Can commercial space be combined with residential?
Being able to shift seamlessly from offering one type of space to another will require both a mindset and an operational change from the property sector, but both are highly possible, Gemassmer said. The global pandemic has only increased the shift to flexibility that was already occurring.
This feature was produced by the Bisnow Branded Content Studio in collaboration with Yardi. Bisnow news staff was not involved in the production of this content.
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