COVID-19 and Its Impact on NYC Property Managers
4.8.20 | Berdon Industry Insights
Due to the COVID-19 pandemic, many businesses have shifted focus to help them survive this unprecedented crisis that is impacting all industries and markets, including the New York City Metro Real Estate market. Real Estate organizations of all types are feeling the strain of the current environment, but property management firms are facing a variety of challenges due to the mass ambiguity regarding the significance of the impact the crisis is having on their tenants. As businesses continue to adjust to the “new normal,” it is difficult for property management firms to clearly assess the current situation. As such, it is imperative for them to have contingency plans that address the challenges presented by both the best and worst-case scenarios.
While a primary focus for property management firms, and all businesses, is the health and safety of their employees, cash-flow and short and long-term liquidity are also concerns that need to be addressed immediately. As all “non-essential” businesses have been forced to close their doors, a great number of people are losing their jobs, which may significantly impact their ability to pay rent going forward.
To combat this, Patricia Hutchinson, of Mission Rock Residential, and Barry Blanton, of the Institute of Real Estate Management, both stated on Bisnow’s “Managing Properties in the Age of Coronavirus” Webinar that property managers will need to communicate with their owners and tenants to devise individualized rent abatement plans that allow tenants to pragmatically pay their rent. For instance, some companies have incorporated ways for tenants to pay electronically and have been encouraging residents who typically pay by check to use this technology. If an effective solution is not implemented, property management companies are at risk of a decrease in cash flow and ultimately endangering their own business. Based on April 1st estimates, it appears that approximately 90% of tenants in New York City either paid their April rent in full or arranged a rent abatement plan. While positive, many landlords are expecting this percentage to drop significantly next month.
In terms of the virus itself, limiting the spread within their properties is another major concern for property managers. It has been suggested by industry executives that in order for property managers to effectively manage the spread of COVID-19, they should establish a crisis committee that can develop a strategy to properly handle the infected and potentially infected tenants and limit the spread of the virus within the apartment complexes and buildings. When discussing limiting the spread of the virus with Michael Mintz, CEO & Co-Founder of MD Squared Property Group, he said “we are working diligently to make sure each building is equipped with the cleaning supplies and personal protective equipment necessary to work in a safe and sanitized environment.” Like many other property management companies, the MD squared team is fully operational from home and have implemented several safety rules to protect their employees and tenants.
Regardless of the strategy, transparent communication and avoiding assumptions are key. If a tenant tests positive for the disease, it is imperative that the management company take the appropriate steps of self-quarantining, sanitizing and concealing the identity of said tenant/unit, in accordance with HIPAA. Failure to do so, can lead to an increase in infected tenants, mass hysteria and potential lawsuits. Mintz also touched on this topic, discussing best practices, saying “we have implemented best practice procedures, based on CDC guidelines, of how to sanitize and maintain a safe living and working environment in general and specifically once notified of a resident who has tested positive for COVID-19.”
As the situation continues to evolve, property managers will need to proactively adjust their strategies to ease concerns, ensure safety, and be ready to operate efficiently once the market and the world begin to normalize.