The industry and its leaders will continue to contend with the numerous impacts of the pandemic in 2022, including the labor shortage and apartment occupancy, in part two of our executive preview.
According to the Beige Book from the Federal Reserve, labor shortages across the nation and sectors has hindered economic activity, consumer spending and manufacturing. In the latest data from the Bureau of Labor Statistics, 4.2 million people quit in October 2021, down from roughly 4.4 million in September 2021, but up from 3.4 million in October 2020. The real estate and rental and leasing industry saw 48,000 quits in October 2021, 11,000 more than the previous month and roughly unchanged from October 2020.
“Recruiting and retaining in our industry is our biggest challenge,” says Traci Hall, President – West Region with AMLI Residential. “There is incredible pressure on compensation, and I truly believe that if you provide the right culture and engagement for your team, they will stay and continue to thrive and create value. After a moderate year of turnover in [2020], 2021 will likely see the highest turnover of employees in five years.”
Ronda Puryear, CAM, CPM, President, Residential Management with Management Services Corporation (MSC) and NAA 2022 Chair Elect, believes the Great Resignation is a real challenge for the industry. There are people that don’t want to come back to the office or retired, and people are leaving the industry altogether. Like many, Puryear sees this especially challenging in the maintenance field, where she can’t find employees because people aren’t going into that trade like before. She is reaching out locally, personally, to help fill these vacancies. They are increasing pay to match the competitive market and have become an even more employee-centric company.
Don Brunner, President & CEO of BRG Realty Group and NAA 2022 Chairman of the Board, says at BRG “we are always trying to provide opportunities for growth and best-in-class benefits for our employees. These efforts have led to numerous employee referrals which is our best opportunity to find new team members. As expected, these referrals traditionally fit well into our culture and perform well, but it's still not enough. We continue to look for additional options for new talent streams. “
Chris Burns, Senior Vice President with Lincoln Property Company and NAA 2022 Secretary, wants to know where all the candidates have gone. “On 62,000 units in the South, I've probably got 80 positions open. We could fill the positions if we had candidates, and particularly, the maintenance side is tough. There are just no maintenance candidates to be found. There's literally just no application volume. There are some applying, but it's nowhere near what the normal application flow should be for people applying.”
One way Brunner and BRG are working to add to the pool of maintenance candidates is with an internal apprentice program. While not completely off the ground, new employees receive one-on-one training to either improve or provide a skillset which will hopefully provide them with the knowledge for a successful career. “Unfortunately, in our industry today, so many new employees start on a Monday morning, fill out their paperwork, and are in the field that afternoon,” he says. “With our program, the goal is to develop technicians potentially either right out of high school or transitioning into our industry.”
Occupancy
Occupancy in the U.S. is at an all-time high. At 97.5% in November, RealPage states occupancy is bucking the trend seen in previous years when rates typical see a downturn during the winter months.
“Unless there's something wrong in the submarket, almost every submarket you go to has record occupancy,” Burns says. “People haven't been moving, not so much because they can't afford to buy a house, but there hasn't been any product—because that market has been so tight. So, a lot of those people aren't moving.”
Residents find their circle of friends and are happy with the management team, services, amenities, commute to work, and the like, so they are staying longer than they previously might have when there were more options available.
“At renewal time, it may even make it challenging for some to continue to keep pace, and then they start to look at other options like doubling up or moving from the city center to the suburbs or some of those natural shifts occur if the pricing dynamic gets upside down,” Burns says.
“There are question marks to what happens in the second half of 2022, but I think it's still a decent picture for the first part of the year,” says Burns. “When the economy starts to get a little uncertain, people tend to stay put in their situation … and it does keep some people a little more stationary and not so apt to jump around as much. [They’re unsure if] six months from now they're going to be in the same position or not, so the rental market does kind of benefit from that uncertainty sometimes.”
Michael Miller is NAA Managing Editor.