The quick turn of events early on in 2020 threw the real estate community — and the rest of the world — for a loop. Many of the year’s biggest real estate stories that affected investors most were in relation to ongoing changes due to the coronavirus pandemic. Still, standalone developments from Airbnb, WeWork and Vacasa also made an impact this year.
From a glance in the rear view window, here’s a look at the hottest topics in Property Portfolio from 2020.
The vacation rental market’s comeback
Early spring was a tenuous time at best for the vacation rental market. Amid the uncertainty of a rapidly spreading pandemic and statewide stay-at-home orders, travelers were cancelling reservations and hunkering down at home. As a result, companies like Airbnb and Vacasa initiated cost-saving measures like severely reducing executive salaries and furloughing employees. But, by the time late spring rolled around and people started craving more time outside of the house, the vacation rental market made an incredible comeback.
During the weekend of June 5 to June 7, 2020, Airbnb experienced year-over-year growth in its gross booking value for the first time since February. But, travelers started seeking out new kinds of rentals than previously — ones relatively close to home, in smaller towns and cities, and that would offer the flexibility of a longer stay and the ability to bring pets along.
Likewise, vacation rental company Vrbo told Inman in June that 95 percent of the company’s booking demand at the time was for non-urban areas, and that there had been a 15 percent increase in demand for bookings within 500 miles of the traveler’s home.
In-flux evictions moratoria
Landlord groups in New York City and California were among the first to call for a halt to evictions in 2020 as the seriousness of the pandemic became more apparent to the public. The federal government also enacted a ban on evictions early on, which was allowed to expire at the end of July when renters were once again thrown into the lurch for a month until a new federal ban was put into place at the beginning of September, one now set to expire at the end of 2020.
Individuals states also established and continue to adjust their own eviction bans on a regular basis. In general, the enforcement of such bans has been a bit of a mess at worst and not uniform at best, with outcomes largely dependent on what judge oversees the proceedings.
In recent weeks, landlords, lobbyists and Realtor associations have fought back against bans with legal challenges, arguing that the situation is simply untenable for landlords, and may even be positioning the market for a housing crisis.
At the end of November, the Alabama Association of Realtors and the Georgia Association of Realtors filed a lawsuit against the Trump Administration for the national eviction ban, arguing it merely shifts billions of dollars in rent debt from renters to landlords.
Airbnb’s downs, ups and an IPO
At the end of March, Airbnb CEO Brian Chesky announced dramatic cost-saving measures for the short-term rental company amid coronavirus-induced stay-at-home orders and reductions in bookings, including executive-level salary cuts and eliminating the company’s marketing.
Many wondered how well the company could weather the storm as hosts who depend on income from bookings lost money on Airbnb’s more lenient cancellation policies enacted as a result of the pandemic.
Still, Airbnb pulled through and secured $1 billion in debt and equity funding from Silver Lake and Sixth Street Partners in April. Although some in the industry were skeptical that the company would be able to put forth an IPO this year given its financial turmoil at the start of the pandemic, Airbnb succeeded in filing paperwork for an IPO in November.
But, the company isn’t quite out of hot water yet, as it now faces a class action lawsuit led by one of its hosts over how the company issued refunds to guests in the spring.
Property managers and building owners respond to COVID
The pandemic caused a great shift in American professional and personal life from public and social to private and sequestered, as result of the need for preventing spread of the virus. In response, apartment and office building owners have had to rethink daily operations in order to be able to operate safely and reassure tenants in this new world.
Real estate industry intelligence firm Propmodo recently released guidelines for how property managers can prepare for smooth operations this winter with the virus, including maintaining and updating HVAC systems, adopting staffing policies that allow for remote working and cross-training staff in case of long-term absences, and managing access to buildings, among other measures.
Predictive cleaning, whereby sensor technology determines areas in a building that are used more frequently, and therefore, need to be cleaned more frequently, was also identified during the past year as an essential resource for property managers and owners in order to conduct more effective cleaning.
Likewise, air purifiers with the capacity to deactivate viruses in the air started flying off the shelves in 2020, and will likely become a staple for places of business in years to come.
WeWork gets a new CEO
One month into 2020 — and nearly five months after founder and CEO Adam Neumann resigned — co-working startup WeWork announced its new CEO, Sandeep Mathrani. Mathrani came from Brookfield Properties’ retail group, and had a weighty load going in to his new position. In 2019, WeWork had filed paperwork with the U.S. Securities and Exchange Commission announcing its intention to go public, but had to put a pause on those plans once the filing revealed the company’s significant losses.
Although Neumann stepped into the shadows for some time after his resignation, recent movement from the former CEO shows he hasn’t completely called it quits on real estate. In October, Neumann’s family office, 166 2nd LLC, led a $42 million funding round for residential management software startup Alfred, an end-to-end platform that boasts in-home support and local services for residents.
How landlords dealt with dropping rent prices, non-paying tenants
Economic uncertainty and unemployment have hit the rental market hard during 2020. As a result, many landlords have had to get creative in order to make ends meet by doing things like creating payment plans with tenants, restructuring bed and breakfast-type room rentals to a single-family vacation rental, and helping tenants apply for federal aid.
The number of rental concessions landlords offered to tenants also nearly doubled between February and July, according to Zillow. And, in pricey West Coast markets, landlords have resorted to lowering rents and offering discounts as people who can now work remotely have started relocating to more affordable areas, resulting in trending rent declines in these more expensive markets.
While some larger property management companies and real estate investment trusts received millions of dollars in aid from the federal government through the CARES Act, many smaller management companies and landlords were excluded.
The California Apartment Association told Inman that they believed many small landlords didn’t even try applying for aid because it would be difficult for them to maneuver the restrictions for how aid packages were allowed to be used, and were worried it might end up causing them legal trouble down the line.
Vacasa’s leadership shakeups
Vacation rental giant Vacasa saw some significant leadership changes early on in the year. As then-chief technology officer Tim Goodwin left the company to work for a healthcare communication firm, Jeff Flitton, who was serving as vice president of engineering, was promoted to take Goodwin’s place. Mike Dodson, who had formerly served as chief revenue officer at OpenTable and briefly as CEO of restaurant marketing company Fishbowl, joined Vacasa in March as chief revenue officer.
But, the biggest change at Vacasa in 2020 was the stepping down of founder and then-CEO Eric Breon. After 10 years at the helm, Breon said that “the time was right for me to step away from day-to-day operations” and instead focus on the company’s strategy by continuing to serve on the board of directors.
Matt Roberts, who had been a Vacasa board member and served as CEO of OpenTable for four years, stepped in as Vacasa’s new CEO. Since then, former Zillow and Angie’s List executives have joined the company’s board of directors as well.
Smart investments in a turbulent year
Many investors learned the hard way this year that putting one’s eggs all in the same basket isn’t a great idea. Investors with properties concentrated in urban areas faced a reckoning as many city dwellers made the shift to the suburbs and small towns in an effort to avoid the virus.
Those who maintained a diverse portfolio of investment properties were more likely to remain on solid footing as Americans fundamentally reassessed how and where they wanted to live through the pandemic.
Investors looking for new opportunities also learned that mobile-home parks, generally considered a recession-proof investment, continue to be a sound investment during this pandemic.
As people have also striven to social distance for all daily activities, investors also learned that their parking lots could be given new life by being repurposed as outdoor markets, extra spaces for rental car companies with an excess of inventory, or even as a portable storage location with the addition of shipping containers.