College Town Landlords Facing Challenges
Back in March, at the beginning of the Corona Virus pandemic, people had high hopes for a Covid 19 vaccine, and that it would come soon to eradicate the deadly disease.
And as summer passed, we believed good hygiene and social distancing demands would work, but they haven’t.
As we enter the fall season now in Northern regions of North America, young people’s attitude about Covid 19 is a big question mark and a vaccination is still a long way from most who will need it. Without a vaccine, we’ve seen a migration of renters out of big cities.
Now as the college year begins, college towns are facing a troubled school season. They may lose student education and spending revenues which will impact all businesses in the college towns including student rental housing. What was a very bright marketplace has become clouded in 2020.
12 Things That Impact College Students
- students don’t have funds to attend school
- students can’t really afford ever increasing costs to get a degree
- students can’t afford to rent homes or apartments
- income too insecure even if they have enough now (PPP Cares Act)
- commuting expensive and dangerous
- crowded dorms can allow Covid 19 transmission
- college restaurants could allow Covid 19 transmission
- indoor poorly ventilated classrooms raises infections
- college property maintenance might be underfunded
- some college teachers will refuse to teach in class
- students will be asked to sign Covid 19 wavers
- online education is much cheaper and is the current solution in education
The college year is a long one, and multiple outbreaks are likely going to occur.
Reality Ahead for Fall School Season?
Both Federal, state and city governments are promoting in person educations from K to 12 to University. But teachers, parents, and health workers understand the dangers of contracting Covid 19 indoors in closed indoor settings. Some are forecasting disaster.
Many school buildings have either minimal ventilation or windows are painted shut.
“Colleges and universities just are not designed for social distancing, it’s not in the DNA of institutions of higher learning to keep people apart. We bring them together,” said Sheldon Jacobson, a professor of computer science at the University of Illinois at Urbana-Champaign in an interview on theverge.com.
Students pump hundreds of billions into the economy, particularly housing and food purchases. With international students blocked from entering the US, it’s estimated to cost the US economy a further $43 billion. Those who manage property management companies will need new creative approaches to creating new property management revenue.
Virtual Education isn’t a Passing Fad
As time passes, more schools are choosing online education, and even more will in September if a surge in Covid 19 cases occurs in the schools. This means college students won’t be renting apartments, condos and houses in 2020/2021.
Educators and students are just now beginning to see the advantages of virtual education. Less commuting, more time to focus on vital course material, and reduced real estate related costs, which will lower tuitions in future.
Further, like all other business including property management business, gowing virtual means big cost savings and greater efficiency. Retail stores and offices in these towns will see a further decline in demand too, as business activity falls. Some US towns are highly dependent on college students and their typical spending habits. The same applies to college towns in Canada, Germany, Australia and the UK.
And the loss of college sport revenue has to be mentioned.
How Colleges are Adapting
Colleges are freezing hiring, furloughing employees, reducing building and property maintenance budgets, and more of their budget is going into trying to make classrooms and buildings safer for students and faculty.
The situation in New York City is perhaps the most severe. The city has been reeling from a general exodus of renters to suburbs or rural areas. It’s a bleak situation for NYC landlords who are seeing spiralling vacancies.
In a story on newsday.com, SUNY’s Stony Brook University’s President Maurie McInnis said in a letter to faculty and staff. “The economic havoc COVID has left in its wake will be significant and long-lasting, and it is impacting Stony Brook’s financial health in multiple ways.”
A one year collapse of apartment rental market is bad enough, but it’s the ongoing reduction of revenue that will need solutions.
SUNY like other colleges is also tapping into their financial reserves to get through the coming 8 month draught in revenue and business. The situation might be worse for colleges which can’t reduce operations, and instead operate for the sake of a small number of in person classes.
The virtual education experience might be a permanent matter for colleges too as students seek to avoid huge $100k college debt burdens. And some colleges are reportedly raising tuition fees for the fall semester by as much as 20%. As online education gains more credibility, colleges may be forced to change to a more virtual service model.
And this means college students won’t have to move to college towns for crowded dorms and accommodation they can’t really afford.
Solutions for College Town Property Management Companies
The loss of student renters is imminent and the one year losses before the vaccination will be substantial. Post Corona Virus will be different, and packing in students might not be permitted. The Corona Virus is expected to linger for many years, or even never be fully beaten.
Rental landlords will want to redevelop their rental properties to focus on regular renters. As the economy improves, these rentals will be rented again. Property managers should look into digital services as an amenity, complete renovations to modernize perhaps with touchless technology.
Are you a landlord needing a property management company. Don’t just go local. Take your time to assess a a variety of firm’s range of services and professional accreditation. Your new property management services provider is going to be your key business asset going forward.
Ensure they use ManageCasa, a modern property management software platform with all the essential services and financial reporting tools.
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