ULI Tampa Bay’s May 7th Town Hall on Multi-Family was led by ULI leader Phillip Smith, President of the Framework Group.

Experts from market research, land, capital markets, construction, property management and affordable housing shared their immediate responses to COVID-19 and meditations on the future of multi-family in Tampa Bay and beyond.

The full recording is available for members here.
Highlights of the discussion are included below:

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Lesley Deutch, Principal, John Burns Real Estate Consulting

“We’re calling it the great American move. I think what’s going to happen …. is that by the time everyone opens up… everyone is going to want to move… They are going to want to move out of their apartment and back in with mom, they are going to move from their [class] B apartment to an [class] A apartment if they have kept their job. Maybe they want to move out of a house because they lost a job or maybe they are going to move to a new city because they don’t like where they are living anymore”.

• Tampa is standing out among the metropolitan areas with positive news from rental payments and home sales. Rent collections are down, but they are not as down as expected. That may change as local and federal benefits go down.
• Rents are likely to start decreasing and some of that will come in the form of concessions and incentives.
• Everything has been good for the last several weeks, but there has been a very big shock to the economy. The data is likely to get worse over time.
• Trends we were already seeing in the apartment industry, such as virtual tours and leases, have been accelerated.
• The desire for Surban living – a lower density place that is still walkable and accessible, may increase.
• Suburban living might come back in a very big way. Single family for rent may be the beneficiary. Desire for detached living with a bigger space, but still a rental environment.
• New construction is a huge opportunity to adjust to some of the new preferences in design and amenities.

Lesley’s PowerPoint can be viewed at this link. 

Ryan Sampson, Managing Principal, Eshenbaugh Land Company

“All and all this is not a monetary issue that we’ve seen at the moment. Land value has not been affected. It’s been a pause. A 60 to 90 day pause… we are hopeful that by fourth quarter we are back and going.

• Contracts have been extended 60 or 90 days.
• Landowners are not as fearful as the buyers and aren’t giving a discount on land. They are willing to wait 6 months – 9 months to get pricing.
• Opportunistic funds are calling looking for deals.
• People are still making offers. Adding covid clauses or adding to the timeline.

Keith Melton, Senior Vice President, Walker & Dunlop

“There was a lot of fear that renters were going to stop paying. What we’ve seen overall is much better than anticipated….There has been a macro infusion in the market that has greatly helped. The Fed has created confidence in the market. The last 4 weeks have much more stable than the first 4 weeks.”

• Banks and life companies have tightened up and become more conservative with their loan to cost and loan to value ratios.
• Fannie Mae, Freddie Mac and HUD continue lend and take advantage of low interest rates. Mitigating risk with debt service reserves.
• Interest rates are incredibly attractive.
• If construction costs come back in line or stabilize – we’ll continue to see good growth
• The market is the key. Good job growth markets and markets that have diversity across the table will continue to do well. It will still come down to fundamentals – good market and location.
• Yields might drop some but not at the level we saw at the last downturn.

Kristine Retetagos, Vice President, KAST Construction

“This is going to benefit construction costs. Commodity pricing has dropped. Future fabrication is where we are going to see some savings. We are trending downwards in the cost of labor.”

• Construction is considered essential and schedules haven’t been disrupted.
• Job sites have had to change to accommodate social distancing with new protocols in place. For tall buildings, minimizing use of the buck hoists for moving people and materials is challenging.
• Building inspection procedures have changed and some are done virtual.
• There have been a few isolated supply concerns, but very few delays.
• Some jobs did get pushed back or canceled and so the demand for labor has lessened a bit, bringing the costs down.

Mary Hollands, Senior Vice President, Gables Residential

“There is really no norm anymore. Forget about how you ran apartment communities for the last 30 years. This has forced us all to look differently at how serve it for the future…. a lot of good came from learning how quickly we could adapt. Our industry is truly an art.”

• From a service perspective, the focus has become how to still serve but do so safely and differently. Serving with compassion. New training was quickly required and a focus on caring for residents, who are all home, and associates, who are considered essential.
• The business of running a management business was still very important while the service adjustments were made.
• The response has opened up opportunities to be creative and make quick adjustments.
• To mitigate delinquency and keep occupancy up, focused on helping residents pay their rent successfully. Allowing for flexibility really helped the situation, including allowing folks to to pay differently than they did in the past. Payment plans, etc
• Development changes that may take place in response to this will impact how operators manage buildings and run budgets going forward.

Debra Koehler, President, Sage Properties

“Housing is healthcare. It has been demonstrated in the last 6 weeks that if you didn’t have safe decent and affordable housing then your health was in jeopardy.”

• Workforce and senior housing
• Over 50% of residents have reduced hours or lost jobs
• Took a very proactive on rents and helped residents early on with all the rental assistance programs available. Less than 10% delinquency
• For the first time in 13 years, the Sadowsky fund was fully funded in 2019. The budget constraints that may result means we need to continue to focus on this. Housing is more important than ever.