What do tenants want in a postpandemic world? By David Gargaro
The keys to running a successful rental property are to attract responsible tenants who pay their rents, and to retain existing tenants for the long term. This has proven to be difficult in many markets due to the pandemic, governmentenforced lockdowns, challenges associated with collecting rent from tenants who are either unable or unwilling to pay, the moratoriums on evictions, and delays in hearings at the Landlord and Tenant Board and other tenancy tribunals across Canada. Rental property owners have also had to postpone capital projects and maintenance, change how they lease and operate their properties, and make numerous changes to help keep tenants and employees safe. Another pending obstacle to finding and retaining responsible tenants is the changing lifestyle preferences of tenants in a post-pandemic world. Canada’s rental housing industry has experienced shifts in demographics and tenant preferences due to the pandemic, which has increased the supply and decreased demand for rental properties in some markets. This has forced some rental property owners to decrease rents and provide incentives to keep and attract tenants. Going forward, rental property owners will have to consider how tenants’ wants and needs have changed to keep their buildings occupied by responsible tenants who pay their rents.
Tenants’ lifestyle preferences are changing Local Logic, which quantifies access to amenities and services across North America, studied how tenants’ priorities have shifted since the beginning of the pandemic. It compared the differences between interactions with its Location Scores in the first quarter of 2020 with the last quarter of 2020. Key findings include:
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• In the first quarter, the three most desired characteristics were elementary schools, public transportation accessibility, and grocery store proximity; in the fourth quarter, the list changed to elementary schools, grocery store proximity, and quiet neighbourhood. • In the first quarter, approximately 14 per cent of all interactions involved public transportation; this dropped to about 10 per cent in the fourth quarter, resulting in a 24 per cent decrease. • Proximity to grocery stores increased from 10 per cent in the first quarter to almost 13 per cent in the fourth quarter, leading to a 21 per cent increase in interactions.
• There was increased interest in quiet surroundings and park access (about 9 per cent), as well as proximity to cafes, restaurants, and shopping areas (about 8.5 per cent). • Interest in daycares and nightlife near rental properties decreased from the first to the fourth quarter (by 20 per cent and 10 per cent, respectively).
Understanding the numbers The pandemic has spurred significant growth in online shopping. According to a CBC report, the percentage of Canadians buying groceries online has increased from between 12 and 15 per cent prior to the pandemic to about 30 per cent. However, as indicated in the previous section, tenants are more interested in having a local grocery store than ever before. They want the option to walk to the grocery store, either to purchase goods inside or take advantage of curbside pickup. It is expected that online grocery use will decline and balance with in-store and local grocery purchases when the pandemic subsides. How can rental property owners provide tenants with greater access to local grocery stores? Most rental property owners do not have the ability to build or influence the construction of local grocery stores, and don’t have the space to include this amenity in their building. However, they can support grocery stores in the neighbourhood and promote this fact to potential tenants. Providing tenants with a neighbourhood map and contact information for grocery stores and related amenities will help to show support for local businesses and provide people with a reason to become tenants in their buildings.
gather and interact outside of their work and home. Shifts in tenant preferences have shown increased interest in rental properties that are in close proximity to cafes, restaurants, shopping areas, and parks. Rental property owners should do well to highlight any public spaces, especially parks, when marketing available units to potential tenants. Real estate developers, municipalities, and key decision-makers should also consider changes in tenants’ preferences, as well as the preferences of the general public, with respect to planning a neighbourhood and multi-family property developments. Easy access to parks and other public spaces should be included in the design, as people tend to feel safer in open spaces. Parks were one of the most regularly searched location characteristics before the pandemic and that level of interest has increased since the pandemic has gone on.
The pandemic has led to a decrease in the use of public transportation. According to Transit App, ridership is 77 per cent lower than normal in Canada. The shift to remote work and the desire to avoid crowded spaces has combined to dramatically reduce the number of people taking public transit. Tenants looking for new rental housing are less interested in access to public transit than they have been in the past. However, access to public transit is still in the top three most valued location characteristics. When the lockdowns and restrictions end, and the public’s fear of using public transit subsides, access to public transit should rise in interest among tenants looking for a new place to live. Even though renters want to reduce contact with others as much as possible, access to public transit is still a deciding factor for many people looking for a place to live. Going forward, rental property owners should continue to promote access to public transit as a reason to live in their buildings. Generally speaking, people want to live near public and quasi-public spaces where they can
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While in-person shopping has declined and online shopping has grown during the pandemic, it might seem counterintuitive to highlight cafes, restaurants, and shopping areas as enticements for tenants. The growth in demand for these types of local amenities could seem odd, as people have already been forced to spend a lot of time indoors, and they have also been encouraged to avoid being in close proximity to others. However, it makes good business and economic sense to support local businesses near rental properties, and having cafes, restaurants, and shopping areas in the vicinity could encourage tenants to choose one property over another.
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Changing preferences in unit sizes According to Local Logic, smaller rental units made up 69 per cent of all rental market listings in Canada in 2020, which is an 18 per cent increase compared to 2019. This increase is likely influenced by the decrease in short-term rentals and fewer student-occupied units, which has added to the inventory of available rental units. In addition, smaller units were in less demand from people searching for a place to live in 2020. Threeto five-bedroom units saw an increase in views per listing, with four-bedroom units experiencing a 54 per cent rise in views per listing year-overyear.
separation and include shared printers, ergonomic desks and chairs, and other equipment. They can create built-in nooks for office space within rental units, or play spaces for children. Rental property owners can also offer free high-speed Internet for a trial period to attract new tenants. Rental property owners can offer partially furnished units to appeal to families. They can set up a gardening area or provide free plants to help tenants beautify their units. Making buildings pet-friendly will also appeal to a wide range of tenants, since pet adoptions have increased during the pandemic and pets will remain part of the family.
From March to May of 2020, demand for all rental units was down. While overall demand started rising in June, there was a greater increase in the demand for larger units. The level of online demand for four- and five-bedroom units increased by 13 per cent and 47 per cent, respectively, year over year. Demand for one- and two-bedroom units decreased between 26 per cent and 15 per cent, respectively. The increase in demand for larger units is partially due to the increase in remote work and online learning. Families are looking for additional bedrooms that can be turned into an office or to isolate family members who are ill, as well as second bathrooms to accommodate more people being home during the day. Tenants are also looking for larger kitchens to make cooking at home more comfortable, more closet and pantry space to store more goods, in-unit washer/ dryer amenities, and dedicated personal outdoor space (e.g., balconies or patios). Therefore, rental properties with larger units and more space can best attract tenants seeking those amenities.
Providing tenants with amenities Rental property owners are limited in what they can do to attract tenants with respect to neighbourhood amenities and unit sizes. These are relatively fixed elements. However, they can take some actions to address changing tenants’ preferences in a pandemic world. More people are either working from home or have children learning from home. Rental property owners can repurpose rooms as coworking spaces with vertical screens to provide
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To help improve health and safety within buildings, rental property owners can install contactless doors on front entrances, elevator entrances, and unit doors. Installing HEPA filters in individual units or the whole building will help to create a healthier environment. Property managers can set up a contactless shipping container or area within the building to receive packages. They can also provide free workout equipment (e.g., yoga mats, dumbbells) to tenants who request those items to work out in their units.
Conclusion The pandemic has not yet ended and the timeline for returning to normal is unknown. However, tenants’ preferences are clearly changing and rental property owners will have to adapt to attract and retain responsible tenants. Future rental developments must consider issues such as access to parks and quiet spaces, as well as neighbourhood grocery stores, cafes, and restaurants. Access to public transportation will always be essential to tenants, although the long-term case for remote work may decrease its importance somewhat. This will also affect what tenants will want in their units and their buildings, which rental property owners should consider when looking for ways to attract and retain tenants.
RHB, RHB Magazine, Tenants, Post-Pandemic