As we move into a delayed peak leasing season for 2020, we’ve decided to dig into our leasing data to see how the season is shaping up — and what operators need to know to win.
This analysis is pulled from actual leasing data anonymized across top apartment owners and operators, and will help operators understand renter behavior so they can capture the largest share of apartment seekers.
As expected, leasing behavior dipped in March and April, when COVID lockdowns set in and unemployment increased. Since then, most leasing metrics have recovered, and some are even flourishing — for example, new leads are through the roof. However, it remains to be seen whether operators can convert these leads into leases, as prospective renters today enter the leasing process with a different set of priorities.
In 2020, leads began to surge right before COVID hit, then steeply dropped. The lowest point dropped to about 13 percent of units with leads, which was similar to February 2020 levels a couple months before — but was obviously quite low compared to the same time period in 2019, which saw about 18 percent.
2020 leads have climbed steadily since, reaching 25 percent of units with leads, an even higher percentage of new leads than the same time period in 2019 (which only saw about 20 percent). As we explored in our mid-June rent payment analysis, apartment searches surged in June, and it appears these searches are translating into a large influx of new apartment leads.
Top-of-funnel apartment interest is very strong right now, and as the summer months progress it’s increasingly important for operators to capitalize on this enthusiasm. Many renters waited until lockdowns were lifted to begin their search, while others financially impacted by COVID may be seeking out more affordable apartment options. Consider ways to attract these financially-savvy apartment seekers, by promoting competitive rent rates or by marketing a Zero Deposit move-in.
Just as with leads, application activity saw an obvious drop that coincided with COVID in mid-March and April. Applications have fully recovered since then, and are now slightly above peak levels in 2019 — although the lift in 2020 applications isn’t quite as dramatic as new leads. This again proves that renters are looking to move, and many of them are submitting applications to their top apartment choices.
Taking this into account, operators need to continue streamlining the application process to ensure that it’s a one-click experience. It’s important that the entire leasing process can be completed online, from virtual touring to online applications and signatures. Avoid additional approvals or steps, such as surety bond applications, to keep your applicants moving down the funnel.
New lease signings followed a similar trend to applications, which saw a strong increase in late February and early March, followed by a notable drop when COVID struck. After bottoming out mid-March, leases got mostly back on track by late April.
However, signed leases have yet to see a major spike in 2020 — and don’t match the signed leases seen in the summer of 2019. For example, June 2019 saw 1.5% of units with a lease signed, while June 2020 is showing only 1.3% at its peak.
While it’s promising to see signed leases have returned to pre-COVID levels, they don’t reflect the major surge we see in leads. The takeaway for operators? Apartment-seeking may be on the rise, but not all renters are ready to commit to a lease. It’s more important than ever to speak to their needs, and to do so better than the competition. Are you offering a seamless, affordable move-in? Are you eliminating expensive security deposits? Can you throw in additional benefits for free — such as gym usage, free cable, or storage space?
Class C properties show a very strong post-COVID surge in new leads, generating even higher lead percentages than Class A and B properties. Class C residents were hardest-hit by unemployment during COVID and as a result, many struggled to make rent payments in May — this could have driven Class C residents to seek more affordable rental options, leading to a sharp upswing in new leads.
All asset classes have seen a recovery in post-COVID applications, with Class B showing the highest percentages since March and April, and Class A properties experiencing a recent spike in applications in June. Applications for Class C properties have returned to pre-COVID levels, but aren’t showing a major increase to coincide with their large surge in leads.
Interestingly, Class C properties are showing the lowest number of signed leases during this delayed peak leasing season, in spite of driving the highest percentage of new leads. This suggests that while interest in moving to a new apartment is high among Class C residents, they may be nervous to pull the trigger on a new lease. Class A properties, meanwhile, are seeing a strong surge in signed leases in June, aligning with the bump in new applications.
Overall, the outlook for multifamily this leasing season is positive — top-of-funnel metrics are strong, and June 2020 showed a higher percentage of leads than 2019. A growing number of renters are seeking out new apartments, visiting property websites, and filling out applications.
As leasing season continues through the summer, it will be imperative for apartment operators to continue attracting new leads, while focusing their attention on converting those leads as they move through the leasing process. Affordability and ease are top-of-mind for today’s renters, and competition will be fierce. Expensive security deposits and clunky application processes will be deal-breakers in this market, so it’s imperative that properties eliminate all of these sources of friction.
Check out our Peak Leasing Playbook, a complete guide on driving more leases during the 2020 leasing season.
Leasing data is sourced from direct integrations with property management systems in the multifamily industry.
Analysis includes a 87,978 unit sample from 1,029,428 live units under management by LeaseLock clients. Data is nationwide, representing over half of the NMHC Top 10 property managers in the country and all asset classes (A, B and C). Asset class composition: class A (36%), class B (55%) class C (9%).
All data has been anonymized to remove personally identifiable information for renters and property managers.
*Statistical note: 2019 application data may appear slightly lower due to historical data migration limitations.