As consultants and owners of predominantly multifamily properties throughout the U.S., we have had many conversations about the state of the asset class throughout the pandemic, from wildly swinging cap rates to mass tenant migration, but no topic has been asked so much as collections. Of course, for good reason.
While multifamily generally remains to be one of the most resilient commercial real estate plays due to its role in the filling of a fundamental human need, many see the COVID-19 pandemic to be the ultimate test of the strength of such protection. Due to increased joblessness, layoffs, and a host of other factors, it is no surprise that collections fell steeply across the multifamily sector at large, particularly among low-income properties.
Looking Up
But new research coming out suggests that there might be an incoming light at the end of the tunnel. New data out of the National Multifamily Housing Council’s (NMHC) Rent Payment Tracker initiative is showing month over month increases in rent collections across the 11.3 million units surveyed. The initiative, which combines data from major multifamily management software giants such as Yardi, RealPage, and others shows January collections up 1.2% compared to this time in December. Collections at this time in 2020 were higher by an additional 1.7%.
This data point is between January 6 and December 6, which notably includes a likely significant amount of tenants receiving their second round of $600 stimulus direct payments, which may skew an otherwise apples-to-apples comparison. But still, the study suggests the path to recovery is there for multifamily as tenants continue to get their finances back on track.
While many in the industry suffering bad debt issues have certainly been hoping for months for a silver bullet to end the pandemic-related woes plaguing their properties, it looks likely now that it will be a combination of things, from the vaccine rollout to government stimulus, that turns out to be the remedy needed.
Learn more about rent collections at NMHC’s website.
