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Survey: Healthcare Designers Look To Future Of Medical Facilities In Light Of COVID-19 Pandemic

The American College of Healthcare Architects (ACHA) has released the key findings of a survey of its members revealing their insights on the future of healthcare architecture and the role of design in the context of the COVID-19 healthcare crisis.

“The extensive experience of ACHA’s healthcare architects gives us unique insights into how this pandemic will shape the future of healthcare,” said Vince Avallone, AIA, ACHA, CASp, LEED AP, the ACHA‘s President. “These findings will influence the design of hospitals and healthcare environments for years to come.”

ACHA Coronavirus Survey Reveals Healthcare Designers’ Role In Addressing The Pandemic

The ACHA survey revealed:

  • Over 63% of respondents helped clients evaluate alternative care sites.
  • Over 60% of ACHA experts were called on to help healthcare systems increase capacity – 28% created over 100 beds.
  • Over 70% of respondents believe design for mass casualty patient surges will be an important element for hospitals in the future.
  • Over 80% of respondents thought the telehealth boom would have major impact on facility design.

ACHA surveyed 129 certified professional healthcare designers to reveal lessons learned from COVID-19 and the role of architects in addressing the crisis. Participants represent areas across North America, including many severely affected states such as New York, New Jersey, Illinois, Massachusetts, California, and Pennsylvania.

What Will Happen With Healthcare Facilities After The COVID-19 Pandemic?

The survey also identified the healthcare designers’ concerns about the future:

  • How can hospitals be designed so normal operations (such as elective procedures) can continue through a pandemic so as not to disrupt regular patient treatment and create financial shortfalls for providing institutions?
  • With the likely implementation of restrictions on patient/visitor traffic flow to control cross-contamination, how will this transform facility intake and entry design?
  • How will increased restrictions placed on patient/visitor traffic flow to control cross-contamination transform facility intake and entry design?
  • How can architects emphasize building flexible, adaptable facilities that can be easily modified to allow a quick response to changing medical priorities?
  • How can healthcare and non-healthcare facilities be designed to handle patient overflow in a more expedient fashion?

ACHA Member Represent The The Top U.S. Healthcare Design Firms

“ACHA certificate holders represent a majority of the nation’s top healthcare design firms,” said Avallone, a Vice President/Senior Medical Planner at SmithGroup. “These results show our continuing commitment to help develop solutions for future healthcare design challenges. ”

For the full results of the survey, click here.

 

Source: Building Design+Construction

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From Bankruptcies To Rent Relief, Here’s How Retail Landlords Can Prep For The Coming Fallout From Covid-19

For the last 18 months, Noah Shaffer has been counseling retail landlords who lease space to Pier 1 Imports to be ready for the company to declare bankruptcy.

Pier 1, known for its eclectic mix of home goods and furniture, filed for Chapter 11 bankruptcy protection in March. This week, the Fort Worth, Texas-based retailer said that it was unable to find a buyer for its business and that it will close all stores nationwide. Shaffer’s clients, however, were ready and already in talks with new tenants to take the space.

Navigating tenant bankruptcies will be far more challenging in the era of Covid-19. The novel coronavirus pandemic has forever changed the restaurant and retail business, beginning with stay-at-home orders across the U.S. in March and April to a severe drop-off in consumer spending. A wave of bankruptcies is expected in both the retail and restaurant industries in the coming months, affecting everyone from national chains to mom-and-pop shops.

 

Source:  SFBJ

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Construction Of Mixed-Use Development In Miami’s Wynwood District Tops Out

CIM Group announced that it has topped out construction of the two eight-story towers set above the ground floor retail and three levels of office space which comprise CIM’s significant mixed-use development at 2201 N Miami Avenue in the Wynwood Arts District of Miami.

The development, which is a major contributor to the evolving Wynwood district, includes approximately 60,000 square feet of office space, 27,000 square feet of street-level retail and studio space, 257 apartments and approximately 480 parking stalls. The 1.78-acre site spans a full city block bounded by NE 22nd and NE 23rd Streets, with approximately 250 linear feet of frontage on N. Miami Avenue to the west and fronts the Brightline Rail to the east.

Three office floors are located above the street-level retail and studio space and extend across the full block creating expansive office space that allows for flexible configurations and the ability to divide the approximately 20,000-square-foot floor plates into office suites. The newly-constructed raw space provides the user the ability to design interiors to meet individual needs as well as a fresh approach to delineated employee spaces and distancing that reflect the demands of our new environment. Abundant floor-to-ceiling windows infuse the space with natural light, while 12-foot high ceilings add to the spaciousness.

Set above the retail and office base are two eight-story towers, at the northern and the southern ends of the block, providing contemporary apartments in a variety of sizes and floor plans, from studios to three-bedroom units.

The development has a central position in Wynwood, a distinctive area in the urban core of Miami, nationally recognized as a center for arts, innovation and culture, as well as one of the major settings for Art Basel, and one of the world’s largest street art installations. The ground floor retail space will accommodate a variety of shops, cafes and restaurants, galleries or other businesses that desire a prominent location in Wynwood.

The Wynwood Arts District has been transitioning from an industrial zone to a flourishing center for art, fashion and creative enterprises, with rehabilitated factories and warehouses repurposed for galleries, studios, bars, workshops, and offices — an evolving neighborhood, which includes more residential offerings.

The project is anticipated to be complete in mid-2021. CIM acquired the fully-entitled site in October 2018.

 

Source:  BusinessWire

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The COVID-19 Shutdown Tests Medical Office Buildings As An Investment

As U.S. health-care systems limit medical services to emergency and urgent care situations in the face of COVID-19, medical office buildings are standing empty, and the threat of tenants missing lease payments mounts.

Still, experts say, investors have every reason to keep MOBs high on their list of sector favorites. In addition to pent-up demand, strong sector fundamentals—aging Baby Boomers, expanded medical insurance coverage, new treatment options and shifts in service delivery—are expected to aid the MOB sector’s rebound and its love affair with investors.

“Medical office buildings and other outpatient care settings have been hot commodities in commercial real estate investment for the past several years,” according to Cushman & Wakefield’s 2020 Health Care Investor Outlook released at the end of last year. “Legacy investors are doubling down on the sector, while new investors are competing for the limited product supply.”

In the meantime, medical office building owners will have to wait for tenants and their patients to return.

Most owners are trying to not make an impulsive decision, to wait and see how this situation plays out,” said Allen Bolden, a partner with HB Medical Real Estate.

But despite the MOB market’s underlying strength, too much time may prove to be an enemy.

The fact that we don’t know if this will last another week or several months is why we can’t give solid answers to the future,” Bolden added. “The only thing we do know is the longer the economy is shut down, the more this will test the strength of MOBs as an investment.”

 

Source: CPE

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Why Multifamily Rents are Holding Up Better than Expected

Despite mass unemployment and underemployment, multifamily rental payments have held up far better than many industry experts expected amid the economic wreckage caused by the spread of the novel coronavirus.

More than 36 million people have filed for unemployment in recent weeks and millions of others working fewer hours and taking reduced pay. That’s amid new estimates that real GDP growth for the second quarter will come in at -42.8 percent. Toss in a backdrop in which, as of December, 69 percent of Americans had less than $1,000 in savings accounts, and it would seem to paint a bleak picture on the ability of renters to meet their obligations.

Yet 87.7 percent of apartment households made a full or partial rent payment by May 13, according to a survey of 11.4 million professionally-managed apartments across the U.S. by the National Multifamily Housing Council (NMHC). That’s up from the 85.0 percent who had paid by April 13, 2020, during the first full month of the crisis caused by the spread of the coronavirus. That’s also down from the 89.8 percent of renter households who made rental payments the year before, when the U.S. economy was still strong and long before the coronavirus began to spread.

“Once again, despite the economic and health challenges facing so many, we have found that apartment residents who live in professionally-managed properties are meeting their obligations,” said Doug Bibby, NMHC President.

So what gives?

There are a few things at work. For one, NMHC’s dataset is weighted towards renters more likely to be able to continue working their jobs remotely and those with some savings as a backstop.

NMHC gathered its data from five leading property management software systems: Entrata, MRI Software, RealPage, ResMan and Yardi. It does not represent all apartments in the U.S. For example, the data does not include many government subsidized affordable housing properties.

“These excluded properties are the ones more likely to house residents experiencing financial stress,” says NMHC’s Bibby.

The data also does not include smaller apartment properties that typically don’t use those software system.

“There are thousands and thousands of buildings with 10 units, 20 units, 40 units,” says John Sebree is the senior vice president and national director of Marcus & Millichap’s Multi Housing Division. “They generally don’t have property management software…. However, they generally have personal relationships with their clientele. [So,] their collections are a little better.”

In all, the percentage of renters who made full or partial payments at less-expensive, class-C apartment properties continues to be lower—by about five percentage points—than the percentage of renters at class-A or mid-tier class-B properties who made payments.

“There’s a little more financial distress among residents of lower-priced Class C properties,” says Greg Willett, chief economist for RealPage, Inc. “Many of those who held jobs in hard-hit industries like hospitality and retail stores live in the nation’s class-C apartment stock.” These families often earn lower incomes and have little or no emergency cash reserves to deal with income interruptions, says Willett.

Still, even in class-C stock, the percent paying rent remains high.

A big reason: The expanded federal $600-a-week unemployment benefits put in place as part of the CARES Act on top of whatever each state normally pays out has left many workers making more money now than when they were in their jobs, enabling them to keep up with rental payments.

As an analysis from Fivethirtyeight.com explained, Congress arrived at the $600 a week figure by looking at the national average unemployment payout of $370 per week and the national average salary for unemployment recipients of $970 per week. So the goal of the $600 was to make up the difference.

But given the income inequality in the U.S., far more workers’ wages are below that average figure than above. The net result has been that for millions of workers, being unemployed has led to a rise in their weekly pay. The multifamily sector has been a backdoor beneficiary of that federal largesse, since it has translated into more people being able to pay rent than one would expect with an official unemployment rate approaching 15 percent.

“The enhanced unemployment benefits provided by the CARES Act are helping the financial burdens of those who have lost their jobs,” says Willett. “These households appear to placing rent payments as a top priority.”

The issue going forward, however, is that the expanded benefits are scheduled to expire at the end of July. So the concern multifamily property owners were feeling before the CARES Act was enacted could rise anew later in the summer if the economy has not sufficiently recovered.

“As current federal support programs begin to reach their limit, it will be even more critical for Congress to enact a meaningful renter assistance program,” says Bibby. “It’s the only way to avoid adding a housing crisis to our health and economic crisis.”

Regional differences

Rental payment rates are also varying by region.

“Rent payments tend to be best in the places where the local economies are heavy on the tech sector or government defense tend to have the high shares,” says Willett. May’s best collections through about the middle of May 2020 are in Sacramento, Calif.; Virginia Beach, Va.; Riverside-San Bernardino, Calif.; Portland, Me.; Portland, Ore.; Denver, Colo.; and San Jose, Calif. “Some 93 percent to 94 percent of households in these places have paid their rent.”

Trouble spots include New York City; New Orleans and Las Vegas. These are locations where the spread of COVID-19 has been especially challenging or where tourism is particularly important to the local economy. The payment figures also are well under normal in Los Angeles, says Willett. Higher-cost markets like New York and Los Angeles are also cities where the expanded federal unemployment payouts are less likely to result in unemployed workers making more than they did while they had jobs.

 

Source:  NREI

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How Will Food Halls Fare Post COVID-19?

Food halls will struggle as states reopen businesses and some may close permanently, say industry sources. Over the long term, however, they should return to their pre-COVID-19 success.

Before the virus hit, there were approximately 226 food halls operating in the U.S., according to Phil Colicchio, executive managing director of Colicchio Consulting, the specialty food and beverage, hospitality and entertainment group at Cushman & Wakefield

“Prior to the current health crisis, food halls were a growing trend that catered to a macro trend among consumers looking for more authentic and varied dining options, as well as more experiential and community elements,” says Scott Holmes, senior vice president and national director of the retail division with brokerage firm Marcus & Millichap. “While there will be time needed, and perhaps some operating changes that will need to be implemented, we expect that macro trend to continue, making these retail centers attractive to consumers and investors alike.”

But initially, food halls will struggle as they reopen due to several factors and considerations for the operator, says Anjee Solanki, national director of retail services with real estate services firm Colliers International. Those considerations include the need for reduced customer entry, strategic seating arrangements and safety measures such as contactless ordering, kiosk ordering and rotating staff. There will also have to be a significant increase in cleaning, according to Adam Williamowsky, director of restaurants at Streetsense, a design and strategy firm specializing in retail and restaurants. This will in turn create higher labor and materials costs to keep food hall spaces safe and prolong the amount of time it will take for food halls to rebound.

“I wouldn’t say [food halls] are dead, they’re just put on the shelf,” says Solanki. “Of course, food halls are going to take a little longer to open compared to drive-throughs or restaurants that have the ability to quickly flip and provide curbside delivery.”

Some brokers in secondary markets are saying restauranteurs and quick-service restaurants are struggling to get their employees back to work because their unemployment benefits are higher than their original wages, says Solanki. Furthermore, the cost of operating will continue to go up in the entire supply chain for the food and beverage industry.

“The current sentiment is generally negative related to these categories, since many have been forced to shut down, through no fault of their own,” says Holmes. “Once the shutdowns are lifted, and consumers begin to feel more at ease, we would expect all of these categories to come back strongly, but it will take time for that to happen.”

In order to proceed with reopening, food hall owners will need to rethink the operations of their establishments, so they comply with social distancing and other state- and city-mandated health and safety guidelines. For national companies with multiple locations this is an added challenge as reopening plans will need to be customized locally, says Solanki. Williamowsky notes that some food halls will be forced to close permanently.

However, food halls will also have some advantages over traditional restaurant venues in regaining their footing once the lockdowns end.

“The trend that I think is most important is the trend of the economic structure that most food halls are built on,” says Cushman & Wakefield’s Colicchio. “The cost of opening up in a food hall for a vendor is staggeringly low when you compare it to either a food truck or a stand-alone restaurant. And that is going to also be a very important component of the bounce back that we all hope to see.”

In addition to many independent restaurants being severely undercapitalized pre-COVID-19, a big issue for the traditional restaurant model was high fixed rent, says Trip Schneck, executive director at Cushman & Wakefield. But in the food hall model, under a percentage rent deal structure, the landlord and the tenants share the risks and rewards of the enterprise.

 

Source:  NREI

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Multifamily Owners Go Virtual to Get Leases Signed Amid COVID-19

Virtual and augmented reality have been available for some time and had seen sporadic use, but the mass COVID-19 precipitated shutdowns nationwide have led to rapid adoption of the technologies by multifamily owners in order to get leases signed during the pandemic.

“Owners of apartment buildings across the U.S. are looking for new ways to have contactless touring… anything to decrease one-on-one touring,” says Georgianna Oliver, founder of Tour24, a technology company based in Medfield, Mass.

New technologies let apartments shoppers to check out potential homes without ever being in the presence of a leasing agent. That includes virtual tours, video chats and even “self-guided tours” that let potential renters make an appointment to see a real, physical apartment without a real, physical leasing agent being present.

These technologies are likely to be helpful, even in places where the rules of social distancing, meant to slow the spread of the virus, have begun to relax. “It’s here to stay for some time,” says Dan Russotto, vice president of product for Apartments.com, based in Atlanta. “Even as things re-open, there are going to be people who want to practice social distancing.”

Apartments.com creates virtual tours in which potential renters can move through a three-dimensional computer rendering of a model apartment.

Potential tenants can turn around to get a panoramic view, back into and out of rooms, and even look out of windows. They can take these virtual tours from the comfort of their own homes. The effects are similar to those in computer games in which players move through three-dimensional spaces. Apartments.com uses its “Matterport” technology to wrap a three-dimensional computer rendering of a model apartment with photographs of that model apartment.

These virtual tours are becoming easier to create. Apartments.com used to have to send photographers to create the specialized images needed to create a virtual tour. The company is now creating technology that allows property managers to take their own pictures.

In May 2020, Apartments.com also plans to introduce an online leasing office. Visitors to its website will be able to press a button on the webpage to start a video chat with a leasing professional.

Other property owners and property managers are using video chats and online tours to attract potential renters.

“We have always used these tools in our lease-up efforts… We are ramping it up,” says Jordan Brill, partner at Magnum Real Estate, based in New York City, the center of the coronavirus outbreak in the U.S.

The firm is using virtual tours to lease-to-own condominiums at it new-constructed properties at 196 Orchard in the Lower East Side neighborhood and 100 Barclay in the Tribeca neighborhood.

Potential residents can also now let themselves into an apartment and receive information about the unit and the community without needing the presence of a human leasing agent.

“In the last couple of months the interest in the product has grown tremendously,” Tour24’s Oliver says. The firm launched its technology less than two years ago. Today it provides self-guided tours at over 100 apartment communities, averaging 250 units each.

Apartment shoppers sign up to tour an apartment online and chose an option to take a self-guided tour. These potential renters download Tour24’s app onto their smartphones. They submit an image of a picture ID and a credit card number, which is verified by Tour24’s system.

At the time appointed for the tour, electronic locks let them into the apartment. The geo-location function on their phones track their location as they move through the apartment and the tour the amenities in the community, while listening to recorded information through the Tour24 app.

“You can have a message for the kitchen and another for bedroom,” says Oliver. “We provide a curated experience similar to a museum tour.”

So far, existing residents have not been too worried about having potential residents visiting their community unattended.

“It hasn’t been an issue,” says Oliver. “With all of the short-term rental activity and deliveries, there is already a lot of traffic in and out.”

 

Source:  NREI

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Related Group Pays $19M For Wynwood Development Site

The Related Group made another big investment in Miami’s Wynwood neighborhood with a $18.5 million property acquisition.

ERBA Diagnostics, previously known as Diamedix Corp., sold 2.27 acres at 2141-2115 N. Miami Ave., 2150-2160 N. Miami Ave., 38 N.W. 22nd St. and 2155 N.W. Miami Court to PRH Investments, an affiliate of Miami-based the Related Group.

Dave Colonna of FIP Realty represented The Related Group in the deal.

Cushman & Wakefield’s Robert Given, Troy Ballard, Miguel Alcivar, Greg Masin, Frank Begrowicz and Jason Hochman represented the seller.

The property has five buildings for a combined 51,205 square feet. However, the zoning would allow for greater density in a mixed-use project.

Wynwood has been transformed from an industrial area into an attraction for street art, entertainment, shopping and dining. New zoning has led to a massive amount of redevelopment with apartments and offices.

“As Wynwood continues to develop and mature into a world-class hub for the arts and creative businesses, opportunities to acquire large development sites are growing harder to come by,” said Alcivar. “This offering presented a rare opportunity to acquire critical mass with flexible zoning in one of the nation’s most exciting neighborhoods.”

The Related Group couldn’t be reached for comment on its plans for this property.

The Related Group has been especially active in Wynwood. It co-developed the Wynwood 25 apartments, the Wynwood Annex office building, and the Bradley Wynwood, which is being leased to a short-term rental company. It has a mixed-use building planned on Northwest 29th Street and a co-living project slated for Northwest 28th Street.

“While Wynwood is known for its dozens of art galleries and an ever-growing number of restaurants, bars, and retailers, the submarket is only just now starting to see larger scale mixed-use development,” said Given. “This assemblage presents the buyer with an exceptional opportunity to tap into Wynwood’s growth potential and be part of its maturation into a liveable neighborhood.”

 

Source:  SFBJ

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Coronavirus Could Set Back The Pro-Density Movement

The movement toward dense, transit-adjacent development picked up steam over the last few years, but the coronavirus pandemic might prove to be a big setback.

The pandemic has forced a quick national pivot toward telecommuting, which some think could undercut the utility of living near transit, according to the New York Times. If you don’t need to go into the office so often, why not spread out a bit?

Density advocates and lawmakers will likely find the pandemic gives rivals new ammunition to argue against their push for more zoning.

Some pro-density lawmakers, like California State Sen. Scott Wiener cautioned that there will still be a need for housing in his state after the pandemic subsides. Wiener has been trying to pass a statewide transit-oriented development bill for years and presented his most recent version in early March, just before coronavirus took the state by storm.

Developers meanwhile have to weigh consumer interest in such housing. Bob Youngentob, CEO of Maryland-based developer EYA, said his firm might switch its focus from more dense transit developments to townhomes if demand for the former falls enough.

“The forced interaction of sharing doors and elevators has caused some anxiety,” Youngentob told the Times. “Townhomes, where you come in and out of your door, and you know you are the only one touching your door handle, provide some comfort.”

Those who continue to build dense projects might reconsider their design strategy for public health — walkways could become wider and open spaces larger, for example.

 

Source:  The Real Deal

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Co-Living Was Built Around Sharing Living Spaces with Strangers. Will It Survive Through a Pandemic?

Before the coronavirus hit, co-living projects were attracting more and more investor money.

Now, as public officials continue to encourage social distancing, questions are rising about whether residents in co-living buildings can even follow these guidelines, as they share communal spaces and sometimes even bedrooms. NREI spoke with Gregg Christiansen, president of Ollie, a co-living operator, about the state of the co-living industry and how the sector has been responding to the pandemic.

This Q&A has been edited for style, length and clarity.

NREI: How has the coronavirus outbreak impacted the sector?

Gregg Christiansen: I think it’s a little too early to tell. What we saw so far in our assets at Ollie, where we focus on long-term leases and institutional quality buildings, we initially saw a pick-up in occupancy in the first few weeks. I think that was really due to the ease of moving into one of our co-living units. So, when all the universities shut down their student housing buildings, we saw an influx of people wanting to move into an Ollie property. So, that was a good thing, I think that was a positive.

I think there has been some criticism, or at least people thinking and starting a little bit too early of a debate, in my opinion, around densification and urbanization. There’s some debate starting to happen on whether urbanization is going to be a thing in the future and whether densification is going to be a bit more criticized than it has been in the past, given that COVID is a virus that transfers to people in close quarters. So, the question is if the government is going to demand spaces to be bigger where people live. If that’s the case, I think there’s going to be a lot of people pushed out of the cities, because the cost of those units is going to be much more expensive to build. So, I think there’s a little bit of a double-edged sword right now in some of the arguments.

What we’ve seen from a positive standpoint as well is our residents have actually appreciated being around roommates and not feeling like they are living in a studio or a one-bedroom apartment all by themselves. So, they actually have the ability to interact with their roommates. So, we view that as a positive from some feedback that we’ve seen. But there’s going to be a debate around apartment buildings and “are people going to be more inclined to live in the cities or not?” That’s a much broader discussion to have, so we’ll see what happens.

 

NREI: Do you think the outbreak might affect the co-living sector the same way it affected the co-working sector?

Gregg Christiansen: No, I think it’s going to be much more resilient. So, co-working [operators basically have] little one- and two-person glass wall rooms that break up a floor plate and stuff as many people into the smallest square footage as possible for the co-working operator to be able to justify the economics to themselves, and a lot of those leases are set on 30-, 60-, 90-day type of structures. Some of them are longer term, but for the most part, they’re pretty short-term leases, with a majority of tenants being small business or entrepreneur-type of individuals. So, in a COVID-19 world, where entrepreneurship is going to be put on pause, you’re going to see a lot of small businesses probably not make it. So, filtering back to the co-working space, the co-working space is going to be the first line to really get hit pretty hard. [It’s going to be] anybody really with short-term lease structures, so you take the hotel industry, the short-term stay industry, co-working industry, and they’ve been probably the hardest hit right out of the gate because of COVID-19. If everybody stops paying rent, people are going to try to get out of their office leases.

The thing about co-living is it’s where people live. It’s where you go home every night. It’s your place of being. It’s where your friends and family know you’re at. So, we’ve actually seen co-living be much more resilient than co-working because those are two very different industries. They get associated with each other a little bit because of the ‘co’ and the sharing economy concept, but when it comes to where someone lives, I think that they take it much more personally and it requires us as a co-living operator to really treat them with the dignity they deserve.

 

NREI: Has the technology co-living operations use been able to help solve the need for social distancing?

Gregg Christiansen: As we were building out our platform earlier, there were a couple things that we saw as a need to communicate and interact with our resident population, but also to make the ease of living much more accessible. We created an app, it’s called the Ollie Living app, and in that, we have the ability to send out notifications, residents can turn on or turn off services, they can ask for maintenance requests, pay the rent, they can sign up for our social calendar.

Immediately after COVID-19 hit, what we had to do as a team, and something I was very proud of with our team, was create a virtual social network where everybody is allowed to go on and sign up for events. Our Ollie social events would typically be in the building, or a local cooking class, or at a yoga studio, but we’ve transitioned our social calendar into more of a virtual social concept. We have cooking classes now online and we do yoga through Instagram. So, we try to still create the feeling of our social calendar, just through our technology that we’ve created. I think that’s actually been extremely beneficial to have that available for our residents, and we’ve actually seen a pretty good participation rate with our residents staying at home.

NREI: Any guidance you can provide on occupancy rates and move-in rates? Is there a concern around those metrics if the lockdown persists?

Gregg Christiansen: I don’t think we have enough data yet to be able to see if there is going to be a concern. We have four different existing assets that are open and operating, we have two more that are under construction, and so, what we’re seeing in New York is we’re still seeing people sign leases. We have the ability to do virtual tours. All of our applications are all on the internet. You can go on and sign a full lease just through the website and do a virtual tour and never have to ever touch a property. So, that’s great. What we have also been able to develop is a roommate-matching software platform that allows people to find other people to live with. So, even if they are not able to go to the property, they’re actually able to create and form a household on our roommate platform virtually.

Occupancy for us is really stuck at above 90 percent ever since COVID-19 hit. Our Pittsburgh asset had a tick-up of about five percent in occupancy once you saw the universities shut down. Then our property in Long Island City is close to 90 percent occupancy now. So, we’re actually seeing positive movement so far.

If [lockdowns] persists for two, three, four months longer, I think a lot of multifamily projects are going to start to see some weakening in occupancy. I don’t think co-living or even standard apartment buildings are going to be completely isolated from that impact, it would be something that we would all have to rally around. But people are already talking about opening the economy again a month from now and we’re starting to see states open back up, so knock on wood, hopefully we don’t get to the point where we’re in July and August and we’re still in this isolation situation. I think the benefit of our properties is that we have long-term leases, so for the most part we have seen occupancy stay above 90 percent since COVID-19 hit.

 

NREI: Are co-living properties still attracting investor dollars? Is that mood changing?

Gregg Christiansen: I think it’s a little too early to tell. I think what we’re going to have to get over is the perception that densification might be more criticized than before. I think people are going to want to see that play out a little bit. What we’ve seen in the real estate industry generally is everybody has put their pencils down for the time being from buying or developing or pushing forward new investment ideas across the spectrum. Whether that’s an office or industrial or multifamily [asset, and] retail especially, people have [pressed] pause to see what the world looks like in a post COVID-19 world. I think co-living is not an exception to that rule. It was a growing niche and people were starting to give it the right attention at the end of 2019, heading into 2020. We were starting to see our pipeline really pick up. So, we were pretty excited about where things were going.

But what we are actually probably going to see is some deals and some development projects either see some issues in financing or delays or certain management companies just not survive. Some portions of businesses will have some failed launches, or some failed start-ups, and I think co-living is not going to be immune to that either. So, we’re paying attention to that a bit.

Our investors are a bit longer term investors, they’ve been supporting us really since 2017. So, we’re pretty excited about where we’re going. Co-living is a niche and niche industries are generally the first to be put on the backburner when there is a recession. I think what co-living has going for it though is we are more flexible and have leaner kinds of platforms. So, we’re actually able to jump into buildings and help out much quicker than your standard co-type of industry.

 

NREI: Are there any other trends developing that you feel are worth keeping tabs on?

Chris Christiansen: I think a couple of things. I think you should be paying attention to delinquencies. That’s something that we’re really watching pretty closely. Just because we have long-term leases doesn’t mean necessarily that everyone is going to pay rent. I think the short-term stays sector is really something to focus on. What we’ve seen so far is our delinquency rates in our co-living units have actually stayed at or slightly above the conventional properties that we’re operating in. So, that’s great. But we’ll obviously have to monitor that pretty closely here soon. And then looking at how governments are going to respond to densification.

 

Source:  NREI

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