By: Leslie Ubl-Shaffer, Sr. Global Advisor, Strategic Alliances – Mobility, National Corporate Housing
The rental market is always in flux. Due to the impact of COVID in 2020, there were fewer corporate housing suppliers maintaining long-term inventory in an effort to reduce the risk of holding vacant units. Some suppliers are now starting to think strategically about rebuilding their inventory as demand starts to return while others are moving to a match lease model (they rent an apartment specifically for that one customer). Listed below are some other industry challenges and how to approach them.
Inventory Not Matching Customer Demand
Due to the rise in working from home, there is an increase in requests for 3-bedroom units. Although it may be difficult to work from home in a 1- or 2-bedroom apartment, 3-bedroom units are scarce for short term housing. Many properties are requiring longer lease terms and are not as willing to rent for only 30 days. They are charging very high fees once leases go month to month. In some cases, it almost doubles the rental amount. The properties see month-to-month extensions as very unfavorable when they can get a long-term lease from someone else, so they are significantly increasing rental amounts. These factors not only have an impact on the number of units available and cost of corporate housing in the US, but also on suppliers’ ability to grant extensions. Availability, inventory and cost will return to pre-COVID levels; however, it will take some time.
Availability, inventory and cost will return to pre-COVID levels; however, it will take some time.
Need for Speed
In the rental environment today, there is a high likelihood of losing a desired apartment if there isn’t an immediate client confirmation. Properties are less willing to reserve or hold units at this point, so there is a risk every time that it won’t be available when one goes back to reserve it.
The more urgency that can be expressed all around the better off everyone will be. When it is not possible to get the client’s first choice, second and third choices often go quickly as well. Clients should be encouraged to decide quickly to increase the chance of securing their preferred option. Local teams will do everything they can to hold options presented for 24 hours whenever possible.
With new set ups, the properties typically will not hold an apartment unless a lease is signed. It is recommended that a decision be made within 30-60 minutes of offering the property options. Apartments are now leasing unseen online and apartments are oftentimes renting before they can be secured. Also, most communities are unable to hold units for 24 hours as they are getting multiple requests for the same apartment, and the apartment generally goes to the first one that reserves it.
Being Proactive in a Reactive Market
Overall, there is an increase in occupancy nationally. As property occupancy increases, the base rent continues to increase, meaning the daily rate will also increase. In most major metro areas, there is a significant increase in overall apartment occupancy including Northern California, Southern California, Boston, NYC, Chicago, all of Texas, Washington D.C., and Denver. National is taking proactive measures with securing long term leases and are in the process of rebuilding inventory domestically. The goal is to approach increasing inventory with a strategy to best support clients’ housing needs. The focus to rebuild is following demand and partnering with clients to build solutions specific to each of their needs.
For example – if a client wants to target a certain area of town, National reviews their pipeline of travelers, discusses with property partners in the area availability and works from there to secure inventory as the client sees fit. Additionally, the team is taking long term inventory to easily backfill apartments, maintain ample inventory, and keep costs at bay for clients.
Most importantly, the goal is to strategically collaborate with current clients to determine which of their customers, locations and programs are anticipated to have growth. This is an opportunity to ramp up inventory to meet client needs. With the recent significant growth in occupancy, this will be a key component for the success of all parties.
Founded in 1999, National Corporate Housing is a global multi-brand corporate housing company that provides fully furnished, temporary housing throughout the United States, Canada, EMEA, APAC, and Latin America. National's unique business model offers a Single Source Solution® for temporary living, including furnished apartments, international serviced apartments, rental assistance, destination services, corporate travel, insurance housing, and talent solutions. For more information on National Corporate Housing, please visit NationalCorporateHousing.com.
About the Author
Sr. Global Advisor, Strategic Alliances – Mobility, National Corporate Housing
Leslie has been part of the National Corporate Housing team for 5 ½ years where she drives new business, manages accounts, and builds client partnerships. She has over 10 years of experience in the corporate housing service area with a strong emphasis on supporting the relocation industry. Her industry knowledge overlaps a wide range of industries from start-up to fortune 500 companies. She consistently focuses on her clients' needs to provide innovative and personalized solutions that match the client's culture and philosophy.