Dallas City Wire

When COVID-19 hit in mid-March, Brian Barton was uncertain as to what the impact would be on his real estate company’s principal revenue.

“Television news was telling viewers they don't need to pay rent, landlords can’t charge late fees and can’t evict renters, which is largely true,” said Barton, vice president of asset management and construction services for Westdale Real Estate Investment and Management. “So, we were very, very concerned about what our collections would look like. In light of that, as a preemptive measure, we delayed our major capital renovation projects.” 

As a result, the amount of exterior multifamily renovation that Westdale is contracting declined some 25%, according to Barton, who hopes to be back to normal by spring 2021.

“We've still got some Centers for Disease Control (CDC) mandates limiting evictions that are impacting our operations,” Barton told the Dallas City Wire. “Once we can be ‘business-back-to-normal’ relative to collecting rent, charging late fees, and evicting people for non-payment then that will obviously open up increased cash flow as well as our ability to expand capital renovation projects.” 

Barton added that collections for Westdale Real Estate Investment and Management, which owns properties in Texas, Georgia and North Carolina, are down 2 to 3% on average.

“We had some large projects that were in the process of starting and we just put those on hold,” he said. “Since then, those projects have started up. I lost about four months of my construction weather window.”

With the Centers for Disease Control reporting more than 7 million coronavirus cases and 205,372 fatalities nationwide, Barton isn’t the only one lamenting projects that have been delayed or left in limbo.

“It's probably slowed us down about 15 or 20% of where we'd like to be just because we didn't have as many people moving out,” said Steve Hefner, senior vice president of construction with Camden Property Trust in Houston. “We were only doing renovations when we had someone move out and before someone else moved in. So, since we didn't have as many people moving, we didn't have the opportunity to do as many renovations.”

Prior to the pandemic, Camden Property Trust completed about $430 million in renovation work on some 32,000 units and had $90 million slated on about 4,000 others, according to Hefner. 

“We're doing 20% less in volume because we just don't have as many units that we can do,” Hefner told the Dallas City Wire. “The good thing is people are willing to pay for that upgraded unit. We haven't seen a decline in that. The decline is in having fewer people moving out because many are just hunkering down and trying to figure out how the world's going to shake out.” 

Hefner expects multifamily renovations to return to pre-crisis levels in 2021 or when the pandemic ends.

“We have a very high clientele and we went from 30 million jobs lost to 11 million jobs lost,” he said. “If that number keeps going down, I assume we'll pick up. We just look at each individual market.”

The coronavirus has brought some changes in protocol. For example, video conference calls are being used to discuss the pre-construction process rather than on-site visits, according to media reports.

“Luckily, since we had fewer units going on because less people were moving out, we didn't need as big a crew,” Hefner said in an interview. “I didn't need 40 people out there working. I could do the job with 15 people and then we gave some additional time since you can't have four or five people in a one-bedroom apartment all working together because you can't do the social distancing.”

A report by RE Journals found that most companies are innovative in advancing multifamily building renovations even while the pandemic rages on.

“Stay-at-home orders and late material shipments have caused some delays, however, the pandemic has also created an opportunity for Premier to work much closer with our customers and help drive their procurement cost down by leveraging Premier’s buying power and transferring those savings directly to our customers,” said Hector Sanchez, CEO of Premier Project Management (PPM), which provides design, architecture, procurement, project and construction management services.

Multi-family renovations currently account for 30% of PPM’s new business in 2020, according to PPM data.

“Multi-family customers have really experienced the value-added from Premier on their projects,” Sanchez told the Dallas City Wire. “This is one of the fastest-growing sectors for us. We have received repeat business from all of our customers.”