In the midst of a pandemic that has confined most residents to their homes, a new CBRE survey of Canadian landlords reveals that multifamily owners and operators have seen big increases in tenant demand for unit features that support work-from-home and social distancing, including in-suite laundry, dens, balconies and walk-up access.
To gauge the impacts of COVID on multifamily properties, CBRE surveyed more than 80 Canadian multifamily owners/operators, representing over 200,000 units nationwide. Participants were asked to provide insights on their portfolio’s performance and the challenges they have faced through the pandemic.
Here are some critical takeaways from the CBRE survey:
- 47 per cent of landlords report that overall apartment vacancy rates have not been impacted by COVID-19. Alberta is the one outlier, already challenged by an ailing energy sector, where 43 per cent of landlords surveyed said COVID led to a 3-5 per cent increase in vacancy rates within their portfolios this year.
- Rent collection has not been significantly impacted by the pandemic. The survey shows that over the first four months of the crisis landlords indicated that rent collection rates within their portfolios had consistently averaged 96 per cent, with no discernible downward trend from month to month.
- There has been a significant shift in tenant turnover patterns. Amid financial security concerns, most residents have delayed moves until there’s greater clarity regarding a COVID recovery, with 35 per cent of landlord respondents reporting decreased turnover rates.
- While the majority of respondents noted a decrease in turnover, there were some segments which had seen increases as financial issues pushed tenants to seek accommodations with a roommate, downgrade to more affordable building, or move in with family members.
- Landlords are seeing increased demand for pandemic-friendly features such as: in-suite laundry, to avoid laundromats and shared laundry rooms; balconies (for outdoor time); walk-up access (to avoid elevators); and dens or small home offices, to facilitate remote work. Landlords also report growing demand for building amenities like outdoor terraces, co-working spaces and private gyms.
“We’ve heard so much about how working-from-home is impacting the office world, but there has been little corresponding discussion about how the home can do a better job of supporting remote workers,” says CBRE Canada Research Director Marc Meehan. “The fact that residents are spending more time than ever in their homes has resulted in noticeable shifts in their preferences and requirements, and landlords are having to adjust accordingly.”
CBRE’s survey shows that investment prospects for Canada’s multifamily sector have been untarnished by COVID. Investment activity started 2020 at a breakneck pace, on course for a new annual record of $11 billion. And while the lockdown curbed that momentum considerably, investment volumes for the multifamily sector have been more resilient than those for other income-producing asset classes.
Multifamily was able to maintain 65.0 per cent of its 5-year trailing quarterly average investment volume in the second quarter of 2020, the smallest decline of any sector, and pricing is now even higher compared to pre-pandemic times for select properties and geographies.