It has been six months since the beginning of the COVID-19 crisis in the United States and while our knowledge of the virus itself is still limited, we have amassed a significant volume of guidance as to best practices for the real estate sector. But while there is good information out there, the large volume of misinformation surrounding the outbreak can make it difficult for managers to find actionable, accurate advice for the challenges they face on a daily basis. Things have only gotten more confusing as the outbreak has gradually morphed from a temporary, near-universal lockdown to a long-lasting affair, the simple state of 2020 as we know it.
As the virus sticks around, apartment buildings are finding themselves full of more people for longer durations of time than ever before. This is putting stress on all of these buildings’ systems, from management manpower to utilities and beyond. We dug into dozens of articles and guides focused on the issues surrounding apartment buildings in a world reeling from the coronavirus outbreak. We’re focusing on seven functional areas:
• General safety • Misinformation • Leasing • Rent and evictions
• Staffing and maintenance • Utilities and internet • Vendors and deliveries • Access control
• Inspections • Marketing • The CARES Act
The top-priority goal for any property manager over the course of the outbreak must be ensuring resident safety. There are several angles that go into this. First is the need for a well-thought out response plan for if residents or staff are exposed to infection, like the one NMHC shared earlier last this year. Second is social distancing. Residents should remain in their units as much as possible to remain as safe as can be, and prevent build-wide outbreaks. While the CDC recommends people maintain at least six feet of distance between one another to help prevent the risk of passing the virus, research from the agency shows that viral particles can travel 13 feet while airborne, highlighting the need to maximize separation whenever possible. Cancelling events is still the best solution, but if events are truly necessary, holding them in a way that is either virtual or allows social distancing (such as outdoor events with well-spread out seating areas) is the next best option. Any business that can be completed remotely or online should be handled that way. Additionally, managers should focus on thorough cleaning and instructing workers and residents on good health practices.
Although it has gotten harder with the passage of time, it is still prudent to restrict access to some common areas. Speaking to a local news channel, Washington Multifamily Housing Association Director of Government Affairs Brett Waller said that “Common areas where people are often in close contact can increase the spread of the virus. In order to limit the spread of COVID-19, it is important to follow public health guidelines and limit access to these common areas to keep people safe and healthy.”
When we first published this report, we emphasized the danger of surfaces as a source of potential infection. In recent months, experts have revised their advice to reflect that surfaces are a secondary danger as compared to direct transmission from person to person, via particles or droplets in the air, but surfaces still pose a threat to be sure. The coronavirus can survive on different surfaces for different lengths of time, like cardboard for up to 24 hours or smooth materials like plastic or stainless steel for two to three days. Contrast that with the virus particles’ staying-power in aerosol form, of only about half an hour. The New York Times, while cautioning that medical treatment can generate a lot of aerosol particles, explained that “The virus does not linger in the air at high enough levels to be a risk to most people who are not physically near an infected person.”
This makes areas where people are coming into contact with shared surfaces particularly risky. Think lounges and gyms. CDC researchers also found that the virus can stick to shoes as well. This is another reason for managers to keep common areas minimally trafficked for the time being.
Generally, owners looking to increase the health of their buildings would be encouraged to start by upgrading air handling and ventilation systems. The same is true when dealing with COVID-19. HVAC systems that recirculate air throughout a building can help the virus spread. At the same time, higher humidities can be beneficial since they cause aerosol virus particles to fall out of the air. A risk is also present for workers who are assigned to change out air system filters. For those workers, PPE use, certainly masks and perhaps gloves, and prompt handwashing are recommended.
“Viruses like flu and coronavirus spread through droplets when people cough or sneeze. When the humidity is higher, the droplets become heavier and fall to the surface, where they are easier to control.”
Samuel Jiang, PE, Skidmore, Owings, & Merrill, in a ULI interview
When it comes to upgrading HVAC filtration systems, there is some guidance on what filters are safer than others, based on their Minimum Efficiency Reporting Value (MERV) ratings, corresponding to the number and size of particles allowed through the system. The highest MERV rating, seen in filters used in hospital operating rooms, have the highest rating of 16. But the typical commercial building filter has too low of a MERV rating to safely catch the coronavirus. managers should make sure that their upgraded filtration systems have a MERV rating of at least 13 to safely catch the coronavirus, according to the American Society of Heating, Refrigerating and Air-Conditioning Engineers. While office HVAC systems can be kept safer by all building occupants wearing masks at all times, this is not an option for apartment complexes.
Other safety measures
Other critical response components include frequent cleaning of shared surfaces like elevator buttons, doorknobs and light switches (alongside other practices such as stocking areas with hand sanitizer). The American Chemistry Council has provided a guide to cleaning products that the EPA considers effective against COVID-19.
As the outbreak continues to force the entire population to adapt to increasingly intrusive prevention measures, special attention must be given to the role that property managers can play in preventing or limiting the spread of misinformation. With social media exerting such a powerful role in our day-to-day lives, the high-stakes nature of the outbreak make it very easy for anyone from the simply ill-informed to legitimate scammers to influence the discussion as well as the actions of people and businesses. The real outbreak may be a virus but in many ways this kind of misinformation is one, too. António Guterres, Secretary-General of the United Nations, recently referred to this problem as “a dangerous epidemic of misinformation.”
There are several things that property managers can do to combat this. First of all, they should be careful only to reshare information that comes from valid sources, whether they are legitimate news organizations or government agencies. The FTC compiled a useful list of tips for avoiding coronavirus-related scams and misinformation, and one particularly alarming bullet point is that individuals should “watch for emails claiming to be from the Centers for Disease Control and Prevention (CDC) or experts saying they have information about the virus.” There are numerous scams currently in use that attempt to sell things like fake virus test kits. It is important that managers do not recirculate this sort of misinformation.
While property managers should feel empowered to react as necessary for the sake of safety, statements should be checked internally as well as with official sources in order to ensure clarity and accuracy of information.
Leasing, rent and evictions
As of September 4, the CDC issued a federal order prohibiting residential landlords from evicting tenants who meet a set of criteria, outlined fully at this link. In general, the order is meant to protect people who have been affected by the outbreak through the loss of income, as well as providing protections for those who would become homeless if evicted. This order is in place through the end of the year.
Apartment managers seeking guidance on how to handle cash-strapped renters can look to NMHC’s guidance, which suggests first and foremost open communication with renters on their ability to pay. Additionally, NMHC suggests that managers “Work with [their] residents on payment plans and agreements and be sure to put them in writing,” as well as considering “waiv[ing] late fees and other administrative costs over the next 30-day period.” While the danger of missing rent is real, it appears that this crisis, at present, will not trigger most lease force majeure clauses.
By late September it has become clear that the rent issue, while still critical, may not be as apocalyptic as was originally feared. According to the NMHC, September full or partial rent payments recieved through the 27th were down only 1.5 percent from the previous year. This should give managers some relief, but the question is now in understanding how much longer this crisis will last, and how long renters can hold out for. The CARES Act (discussed in greater depth later) will provide a cash infusion to most renters but $1200, the amount most individuals will receive, is insufficient to cover rent in many places for even one month. For additional information on which states and municipalities have instituted eviction moratoriums, LeaseLock’s matrix is a great source, listing terms, timelines and dates passed. However, managers should always be sure to confirm the official rules with their local governments.
Staffing and maintenance
Managers are responsible for the safety of their residents to be sure, but they are also responsible for the safety of themselves and their employees. NMHC recommends that apartment companies “should develop an employee leave policy that includes telecommuting, staggered schedules and liberal leave. Firms should establish protocol for employee/supervisor communication, cross-train staff in case of long-term absences and test telecommuting plans to ensure they work.” Any possible opportunity to allow staff to work from home should still be taken. For companies that already use cloud-based property management software, this could be relatively easy. For companies that are yet to digitize their operations, memories of the COVID-19 outbreak could serve as a source of encouragement for getting online after this outbreak has receded. If there are vacant units on-site, management companies should consider encouraging staff to use them for the duration of the outbreak, in order to cut down on possible exposure while commuting to and from work.
Maintenance & PPE
Staff that perform maintenance duties will need particularly close management and strong communication to support them during this crisis. They should always be supplied with PPE: gloves, masks, ideally N95 respirators or their equivalents from around the world, and shoe covers, although hand-washing is more important than glove use.
A note on masks: We now know that mask use is absolutely critical to limiting the spread of the outbreak. However, not all masks are made the same. N95-equivalent respirators both stop people from spreading the virus and offer direct inhalation protection for the wearers themselves. Cloth masks, like those bought in stores or homemade, protect others from catching the virus and may limit the spread of infected droplets from the nose or mouth. Bandanas and neck gaiters are less effective than either of these, but are still better than nothing.
Managers should immediately communicate with their residents that service calls will be responded to as quickly as possible given advice from authorities as well as risk reduction needs for maintenance staff. In a webinar on maintenance during the coronavirus outbreak, Paul Rhodes, National Safety and Maintenance Instructor at the National Apartment Association Education Institute advised a number of specific response strategies, including using gloves during every in-unit visit (and using a fresh pair, donned in front of the resident to show that they are clean). Rhodes also recommended informing maintenance staff of policies and procedures related to leases and unit access, such as lockout procedures. He added that “This is also a wonderful time for cross-training to occur. In other words, for the office and maintenance [staff] since right now a lot of communities are experiencing some different working hours and different staffing levels with people working from home.”
In order to promote resiliency and reliability, Rhodes suggested that this information exchange is a two-way street, with office employees needing to know how to take service requests and understanding the location and function of important devices like shutoff valves and circuit breakers. He concluded by suggesting that managers coordinate with maintenance to identify when service calls can be handled remotely, by helping the resident work through the problem, as well as timeliness expectations.
Utilities and internet
As of late September, utility access has not been disturbed by the outbreak. As the Los Angeles Times reported, utilities in general are confident of their ability to continue providing services, even if the outbreak worsens. Many utility providers have contingency planning in place, instituted after earthquakes and previous outbreaks, like SARS. According to Reuters some power plants may ask core employees to live at work, supplied by ready-to-eat meals and prepared cots, if the crisis becomes worse.
This means that while the risk to apartments of losing utility service is low at present, managers should begin to consider what they will do if services do experience interruptions. According to the NMHC, “Anticipate high absenteeism at your suppliers and service providers that might create disruptions in trash removal, utility service, transportation or supply delivery. Seek alternative service providers and outsource options for IT.”
The beginning of the outbreak saw a spike in internet bandwidth use with so many residents at home, either working remotely or streaming media. As mentioned in a Fortune article, “the volume of traffic won’t necessarily change. What will change are the patterns. Traffic will originate less from offices with powerful connections and more from residential areas. Cable and phone companies that provide home broadband might develop bottlenecks at network nodes where multiple lines converge.” Fast forwarding to the end of summer, The Wall Street Journal reported that bandwidth usage began to all through summer, with classes not in session and stay-at-home orders were lifted. However, with fall here, at-home class attendance is up again and some communities may face new lockdowns in the future. Consequently, bandwidth use will likely remain elevated for some time. For now, this appears to be a relatively minor concern since, as Politico says, “Europe, the United States and most developed countries have internet infrastructure that is built to withstand these surges of activity, according to industry executives and analysts.” Politico also points out that much of the disruption internet users will feel could come from specific services or websites faltering under heavy load, as has recently happened with videoconferencing services.
“Anticipate high absenteeism at your suppliers and service providers that might create disruptions in trash removal, utility service, transportation or supply delivery. Seek alternative service providers and outsource options for IT.”
In the unlikely event that things get much worse, such as in the event of another round of widespread lockdowns, apartment managers may need to encourage their residents to switch to audio-only conferencing when possible. Managers should also communicate with their residents that they may see decreased streaming quality in services like Netflix, which is being pressured to temporarily drop HD streaming by the European Commission. A more concerning possibility is the chance that internet service providers may not be able to help new customers set up their internet amidst the outbreak. Some, like Verizon, are putting limits on the number of in-home, and, apparently, business service calls they are performing due to the risk posed by the outbreak.
Vendors and deliveries
Property managers should expect that other vendors may experience greater disruptions as a result of growing employee absenteeism. If a building offers something like housekeeping or an on-site cafe, it is probably advisable to inform residents that those services may be put on hold for the time being. Things like garbage collection may even see disruption, as well. And needless to say, more face-to-face amenities like fitness classes should still be paused or at least attendance limited to allow for social distancing.
Some good news surrounds payments. Some financial companies are loosening or waiving their fee structures for things like late fees. Apartment managers are advised to adopt a similar approach, with NMHC saying “Firms should remind residents there generally are no fees to pay by bank transfer in case they have read something to the contrary and therefore might be hesitant to take advantage of online payments. Where fees are involved, firms are encouraged to limit or waive them.”
Some residents may wonder whether food deliveries and goods are safe. Packages stacking up may cause some managers to become concerned as well, especially given the figure that COVID-19 can last for up to 24 hours on cardboard. However, in general food deliveries are safe. In an interview with CNN, Benjamin Chapman, professor and food safety extension specialist at North Carolina State University said that “I want to be clear that food or the packages could carry the virus, but the risk of transmission is very, very low. This is a remote possibility and thousands if not millions of times less likely than any of the other exposure routes. Really, really low risk.” The bigger risk comes from delivery people who may have been exposed to the virus. In order to guard against this risk, managers can wipe down packages with antibacterial wipes upon acceptance, or else encourage their residents to do so when they collect their packages. Residents can also throw out boxes and food packaging after receiving it.
“I want to be clear that food or the packages could carry the virus, but the risk of transmission is very, very low. This is a remote possibility and thousands if not millions of times less likely than any of the other exposure routes. Really, really low risk.”
Benjamin Chapman, professor and food safety extension specialist, North Carolina State University
Risk containment becomes a factor here, as well. According to Brick Underground, CEO of Solstice Residential Group Alex Kalajian penned a memo to his company’s buildings suggesting that residents may need to come to the lobby to collect their packages, as well as saying that residents may have to take on some management duties such as “volunteering for performing essential building services such as security, lobby coverage, mail sorting, and garbage collection.”
Buildings with doormen will have an easier time limiting the risk from visitors. These properties can require residents to display proof of identity before entering the building. Similarly, walkup properties that lack common areas will have little to worry about in this regard, since residents already need their keys to gain access. Larger buildings with keycard access will also be able to mitigate the risk from visitors relatively easily.
The goal of visitor management during the outbreak should be to limit larger gatherings. In many cases, prohibiting individuals or small groups of visitors from coming to their friends’ or relatives’ apartments will be met with resistance, as was the case at one affordable apartment complex in Albuquerque, which banned most visitors near the start of the pandemic. Habitat Magazine, in a Q&A, did not recommend flat-out banning visitors, but rather limiting “social events, move-ins or move-outs, alterations or any other activity that involves significant incursions by non-residents.”
Some property inspections have been halted in light of the outbreak. HUD had earlier paused REAC inspections, but those have since been restarted. On March 4, the U.S. Centers for Medicare & Medicaid Services announced an immediate suspension of non-emergency nursing home inspections, not including various initial and recertifications, complaints relating to abuse, and infection control issues.
While the outbreak seems all-consuming, particularly as it drags on longer and longer, the reality is that business will eventually return to mostly normal. The Drum offers a useful list of tips for optimizing marketing communications to outlast the outbreak and wind up in a favorable position when it eventually blows over. While much of their advice is just good marketing planning (things like embracing marketing automation and increasing the role of social media), one point stands out in particular: the need to keep your business, whether it is consumer goods or an apartment, on the radar of your target market. With that in mind, The Drum says that “Now is the time to explore low cost techniques that will keep your brand visible in front of potential clients on a steady basis. It may feel counter-intuitive, but setting aside an advertising budget for keeping your brand visible will deliver long term benefits.”
“Aside from the noise coming in from every direction right now, this market has winners, and it also has losers. That hasn’t changed. Getting people in the door is the name of the game. That hasn’t changed either. What’s changed is how you get them in the door. How you use technology to show them what they can’t see in person.”
Bryan Colin, CEO, VirtualAPT
In practical terms, leasing agents may find that now is the time to expand their efforts with virtual tours. In the residential world, some agents are being asked to pause on touring and other face-to-face activities, as was the case in California. Whether it is mandated or not, it will be in the best interest of apartment staff to halt in-person touring as well. In light of that, virtual tours can represent an attractive alternative. Bryan Colin, CEO of VirtualAPT, a virtual tour company, told us that “Aside from the noise coming in from every direction right now, this market has winners, and it also has losers. That hasn’t changed. Getting people in the door is the name of the game. That hasn’t changed either. What’s changed is how you get them in the door. How you use technology to show them what they can’t see in person.”
In a pragmatic way, some businesses will make wise marketing choices during the course of this outbreak that pay dividends long-term. In a very colorful article on Marketing Week, Mark Ritson points to the role high-end retailer Marks & Spencer played during WWII, mass producing cheap clothing. Ritson points to that as an example of a way to build deep goodwill with consumers long after the fact. While smaller managers may have no such ability to contribute to the public good, larger companies can certainly donate money or resources to providing for the needy as the outbreak unfolds.
Impacts of the CARES Act
The Coronavirus Aid, Relief, and Economic Security Act was signed into law by President Donald Trump on March 27. The largest-ever stimulus package in American history, at over $2 trillion, the Act includes a wide range of funding sources and provisions meant to ease the impact of COVID-19 on the U.S. economy. One of the most notable impacts is a check that was distributed to most Americans who do not exceed an income cap based on their marital status. This check was worth $1,200 in most cases, while each child 16 or younger will bring their families an addition $500.
Much of the CARES act has by now already expired and been renewed or replaced by other policies. The single family foreclosure moratorium, for instance, was set to expire at the end of August but has since been renewed through at least the end of the year. Federal student loan payments and interest accrual was set to expire at the end of September, but was extended through the end of the year as well. However, the original $600 per week unemployment insurance benefit did expire in July. This is the more troubling part for landlords, since there is as yet no renewal or additional stimulus package close to signing. Landlords should continue to carefully monitor their collections and plan out alternative workouts with residents experiencing financial challenges during this time.
At present, it is too early to conclusively say where we are heading with COVID-19. What is certain is that business will not return to the way things were for a long time. With the right information and smart decision-making, apartment managers can protect their residents while reinforcing the value of their brand over the course of the greatest crisis of the 21st Century.