Leasing in a pandemic

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The crisis caused by the coronavirus has forced many property managers to finally embrace new technologies.

When the U.S. economy shut down in March 2020 to fight the spread of the coronavirus, some apartment companies ran a desperate race to set up technologies that would keep them in business.

“Beginning March 13 we flipped the switch and moved to virtual leasing only,” says Norman Radow, CEO of the RADCO Companies. RADCO manages 16,600 apartments, mostly in the Southeastern U.S. “It was already a work in progress. We expected to begin testing it later this year. We accelerated a two-year process into two weeks.”

Other companies began to offer “self-guided tours,” in which potential renters visit apartments by themselves, watched over by a ­collection of electronic locks, motion detectors and their own smartphones.

Experts have been talking about these technologies for years. “COVID has just accelerated trends that were already happening,” says John Helm, partner at RET Ventures, based in Park City, Utah. His firm is a venture capital fund that invests in technologies on behalf of 33 leading apartment companies with roughly 1.75 million apartments. These technology investments range from artificial intelligence to systems that verify photo IDs.

Long after the pandemic is over, these technologies are likely to still be with us. The electronic lock that opens for a prospect on a self-guided tour can later open for a maintenance repair. The wireless network that runs the lock can also communicate with a smart thermostat.

New tech create new options

For now, technology has helped property managers continue to lease apartments as the world economy fights its way through the pandemic.

“Consumers have widely embraced technologically-supported leasing,” said Radow. His firm signed 7 percent more leases in June 2020 than it had the year before, despite the pandemic. “Leasing has picked up nearly every week and we are now seeing activity on par with or greater than the same period last year, and at the very same properties.”

Other apartment firms have offered potential renters a range of choices on how to research apartments during the pandemic. For example, Cortland, an apartment company headquartered in Atlanta with apartments across the U.S. still offers in-person tours, virtual tours and self-guided tours.

In April 2020, while most of the U.S. was closed for business, two-thirds (67 percent) of the potential renters who expressed an interest in Cortland’s apartments in Atlanta took virtual tours. Only 6 percent took traditional, in-person tours with a leasing professional—with social distancing. Another 6 percent took Cortland’s self-guided tours.

In June, as officials re-opened Georgia’s economy, the vast majority (83 percent) of Cortland’s potential renters signed up to visit communities in Atlanta the old fashioned way, by physically touring the property alongside a human leasing agent.

“It’s amazing how quickly in-person, physical tours became the preference,” says Mike Gomes, chief experience officer for Cortland.

The ability of potential renters to take virtual tours and self-guided tours became important again later in the summer, as more cases of coronavirus were discovered in cities across the U.S., including Atlanta. “If we are going to go back to where we were in April, we’re going to have a preference to do a self-guided tour,” says Gomes.

Long after the pandemic is finally over, apartment firms like Cortland plan to continue to offer the whole suite of leasing options to potential renters—including traditional tours, virtual tours and self-guided tours.

“I think they reinforce each other,” says Haldeman. The new, technological options give potential renters a freedom to shop for an apartment any time. “There is a lot of demand for people to tour after hours and on weekends,” says Helm.

Contactless leasing is also a natural fit for people moving to a new home, far from where they currently live. “Out-of-state renters had already shifted in large numbers to virtual leasing—whether it was with a leasing agent holding the iPad on the other end, or the standard online virtual tour,” says Elie Rieder, founder and CEO of Castle Lanterra Properties, based in Suffern, N.Y.

New high-tech leasing tools have especially made an impact in luxury apartment communities. “Class-A buildings have shifted toward technology being a critical part of the leasing process in ways that will likely never go back,” says Rieder. “Class-C is being pulled along grudgingly.”

Coronavirus changes conversation

Technology and the pandemic have also transformed the conversation apartment companies have with potential renters—in ways that most prospects are unaware of because such changes are behind the scenes.

Until recently, the first contact an apartment company had with potential renters was often when they simply showed up at the leasing office. All that has changed with the spread of the coronavirus.

“Very few communities now allow drop ins, with property tours by appointment only—after answering health and qualification screening questions—if person-to-person tours are arranged at all,” says Rieder.

Today the first contact might come from a phone call, an email or even an online chat session. A growing numbers of apartment companies use customer relationship management (CRM) software to make sure none of these messages are missed.

“The property needs a CRM system to track prospects and make sure that are getting the information they need,” says Helm. On behalf of its investor clients, RET has invested in Funnel, a technology company based in New York City, which has created a CRM system designed for the apartment business. Other apartment companies have relied on CRM systems created for other industries, like those created by industry leader Salesforce, a technology company based in San Francisco.

These systems became especially useful during the peak of the pandemic, when many leasing offices were closed. Such systems help automatically route telephone calls from customers to members of the leasing staff working from home.

Customers also made contact through property websites, which now often include a chat function that can answer basic questions. When the chatbot’s artificial intelligence can’t answer a question, the CRM systems seamlessly—and instantly—routs the chat to a human leasing agent who types the answer.

A CRM system also tracks the details of all these messages and conversations, in addition to what the prospect has viewed on the apartment company’s website, once the potential renter is convinced to log in and identify themselves.

Cortland plans to make its website responsive to this information. “A prospect goes to the website and sees different images because of the conversation that the company had begun with the prospect,” says Gomes. “In the real world—in other industries—that happens all the time. In multifamily it doesn’t happen at all.”

The information gathered by CRM system can also affect the emails leasing agents send to prospective renters. “Don’t send an image of a pet if I don’t have a pet,” says Gomes. To help it send the right information to prospective renters, Cortland has created profiles of different types, along with different kinds of communication for each profile. “Instead of sending the generic email, we are able to send something more targeted.”

Virtual tours progress leasing process

Many companies have created what they call “virtual tours.” That could include videos that show off the amenities of a community and the best features of an apartment.

More interactive virtual tours allow prospective renters to seek out the amenities they are most interested in, says Georgianna Oliver, founder of Tour24, a multifamily technology company based in Medfield, Mass.

Matterport, a technology company based in Sunnyvale, Calif., helps companies, including Apartments.com, create a three-dimensional rendering of an apartment. The effect is similar to a computer game. Apartment shoppers can turn around to get a panoramic view, back into and out of rooms, and even look out of windows. Live human leasing agents can also join potential renters on their tour to answer questions from a distance through chat.

Virtual tours proved to be immensely popular with apartment shoppers during the pandemic, when the U.S. largely shut down its economy to slow the spread of the coronavirus. “The volume of views was massive,” says Cortland’s Gomes.

Leasing staff who are physically presents at an apartment community can also give prospective renters a much more simple kind of video tour. They can simply carry an iPad or a common smartphone into a model apartment and conduct a video call with a prospect, pointing the camera on the phone at the appliances and other features of the apartment they would like to showcase.

“Leasing agents and property owners can show units via Facetime or online chat while answering live questions and requests from renters on what to see,” says Dan Russotto, vice president of product at Apartments.com.

“A video chat allows us the opportunity to connect with our prospective residents and to focus in on their specific needs,” says Lela Cirjakovic, executive vice president for Waterton.

Some of these potential renters are willing to sign a lease after viewing the property from a distance. But signing usually comes with a caveat. “If they are signing a lease after a virtual tour, they want a grace period to cancel the lease after they finally see the apartment,” says Rieder.

Other potential renters still want to visit an apartment in person before they sign a lease. Still, virtual tours and video calls can help shorten the list of apartments in which such prospects are interested.

“For residents who still prefer to see the apartment—and we find that a majority still do—we schedule a time to conduct a socially distanced tour of the community and the apartment (or two) that best meets their needs,” says Cirjakovic. “The leasing agent doesn’t go in. You open the door and let the prospect go into the unit.”

Prospects visit apartment properties

Several real estate companies now offer “self-guided tours” that allow potential renters to visit the apartments they are interested in alone, without getting close to another human being who might potentially be contagious.

Since the first cases of coronavirus were discovered in the U.S. earlier this year, the number of prospective renters who take these self-guided tours has grown by a factor of 20, according to Helm.

“This pandemic has been a massive catalyst of change throughout the industry,” says Lucas Haldeman, founder and CEO of SmartRent, a technology company based in. Scottsdale, Ariz.

Haldeman helped create the technologies that make self-guided tours possible, as chief technology officer for Colony American Homes, an owner and operator of single-family rental houses, since bought by rental house giant Invitation Homes. Operators of single-family rentals needed a way for prospective renters to visit houses that were often miles away from the company’s leasing office. Self-guided tours solved that problem.

Just a few years ago, many experts believed self-guided tours could not work at apartment communities. Residents might not tolerate having strangers wandering the hallways without an escort from the leasing office.

The pandemic has forced property managers to face that fear. “Apartment companies realized that they are going to have to shut their doors and close their businesses—or learn to do self-guided tours,” says Haldeman.

So far, the apartment companies that offer these tours report few if any complaints, even though their existing residents were trapped at home during quarantine with time on their hands to observe the hallways and email the leasing office.

“It hasn’t been an issue,” says Tour24’s Oliver. Her company also helps apartment companies offer self-guided tours. “With all the short-term rental activity and deliveries, there is already a lot of traffic in and out.”

Also, leasing teams take care to schedule self-guided tours for reasonable times, such as afternoons or evenings rather than late at night.

To help existing residents get comfortable with self-guided tours, apartment companies had to create a secure process. “We vet visitors before they get to the property; we track them while they are at property and we know when they have left the property,” says Haldeman.

For example, to arrange a self-guided tour using SmartRent’s vetting process, prospective renters must access the property webpage through a smartphone and allow the smartphone to share its location with SmartRent’s system. The system will not give the prospective renter a code to enter the target apartment until that smartphone is within one mile of the property. To get the code, prospective renters must also use the smartphone to provide new photographs of their driver’s license and their own face. SmartRent’s system uses facial recognition to compare the face on the driver’s license with the selfie. The metadata on all of these photos shows they are new. Operators can also use services from companies like CheckpointID, based in Carrollton, Texas, to instantly verify any form of ID issued in the U.S. or Canada.

“The whole process takes between a minute and a minute-and-a-half,” says Haldeman.

As the prospective renter approaches the community, the system will alert property management staff, like a doorman or the leasing office. The prospective renter will use the provided codes to open the electronic lock on the apartment door. A sensor on the door and a motion detector in the apartment report back to SmartRent’s system that the prospect has arrived. The smartphone also continues to report its location.

The self-guided tours created by Tour24 include recorded descriptions of the apartments that visitors can listen to over their smartphones, similar to the recordings that visitors to some art museums listen to as they tour the exhibits, according to Tour24’s Oliver.

It requires just a few pieces of technology to make all this work. There’s the electronic lock, the motion detector and the sensor on the door. The vacant apartment needs a wireless network that will let this gear communicate with the system that set up the tour. The answer is often a small plastic box—a wireless hub that broadcasts on its own frequency. Each hub has its own cell phone antennae to communicate with the outside world.

The whole package costs about $500 for a single apartment, according to Haldeman.

Once property managers decide to set up the network, tech firms will tempt them to install the whole suite of smart apartment technology. The whole package includes the network, lock, motion detectors and sensors in addition to a smart thermostat, smart electrical outlets and more sensors that can detect water leaks—all for a total of $800 to $1,200 per apartment, according to Helm. Several apartment companies report that residents are already willing to pay $25 a month extra for these features, according to Helm. That much extra income from rent alone would be enough to pay the cost to buy and install all of this gear in just a few years.

“Resident feedback has been very positive,” says Jerry Davis, chief operating officer of UDR. “Our SmartRent rollout has been the best received resident-facing initiative UDR has done in years.”


Author Bendix Anderson