| 
Mounting losses and economic anxiety are injecting uncertainty into the Boston area’s apartment-hunting scene, where landlords typically hold a firm upper hand.
Some lease deals are taking longer to execute as prospective tenants ask for opt-out clauses because of potential job losses, a week after a record 148,000 Massachusetts residents suddenly filed for unemployment amid the escalating COVID-19 epidemic.
“We’re getting more leads than ever, and then they get down to brass tacks,” said Demetrios Salpoglou, CEO of online rental platform Boston Pads. “More parents are getting involved, saying, ‘I want to look over the lease.’ The length of the transaction itself is slowing down.”
Brookline-based City Realty is offering $200 gift cards as an incentive to sign new leases through April 15, with the payments dedicated to Allston Village businesses which have been reeling from bans on indoor dining and social distancing measures.
The Hamilton Co. of Allston, which owns approximately 5,800 apartments in Greater Boston, has seen an approximately 0.5 percent increase in vacancies over the past month, Co-CEO Jameson Brown said.
“It’s definitely been a paradigm change, and we’ve been starting to do a lot of rentals sight unseen and through virtual tours,” Brown said. “It seems to be embraced by renters and brokers.”
An increasing number of mom-and-pop landlords are offering additional $200 to $500 incentives to brokers on signed leases, on top of the standard broker fee equal to one month’s rent, said Dave Monheit, president of Brookline-based Encore Realty. Some newer luxury developments in lease-up mode are offering tenants two months of free rent.
Inventory of apartments expected to be available as of June 1 are significantly higher than normal, Monheit said, reflecting existing tenants’ reluctance to sign renewals and other apartment-hunters’ wait-and-see approach.
“The smaller landlords haven’t caught up to that yet, but they are probably going to have to,” Monheit said.
Inventory of apartments expected to be available as of June 1 are significantly higher than normal, Monheit said, reflecting existing tenants’ reluctance to sign renewals and other apartment-hunters’ wait-and-see approach.
“Earlier in the month, when people didn’t have a grasp how long this was going to last, everybody was going to try to wait it out,” he said. “People would apply and then when it was time to sign the lease, back out. It’s such an unprecedented thing that people are getting cold feet.”
Big landlords like City Realty are stepping up their efforts to provide virtual tours, which are currently available for approximately 20 percent of the portfolio. Jacob Simmons, senior project manager for its CRM Property Corp. management arm, said the company’s goal is to have virtual tours for 100 percent of available units by the end of April.
Hesitancy among renters to make lease commitments as the COVID-19 pandemic unfolds may prompt landlords to increase incentives and adjust rents in coming months.
Online Interest Strong
Greater Boston’s strong job growth and large student population contribute to its ranking among the nation’s four most expensive rental markets, and occupancy rates that consistently hover in mid-90 percent territory. But as portions of the region’s economy shut down in March, tenant behavior started to change.
Boston Pads’ Salpoglou said interest remains strong based upon record-setting visits last week to the firm’s web site, which contains a database of more than 165,000 units. Vacancies declined slightly in mid-March as local colleges shut down dorms, and some students sought to rent apartments nearby. Since then, the vacancy rate in the Boston Pads database has increased from 0.79 percent to 0.97 percent.
The real test will come closer to Sept. 1, when nearly three-quarters of apartment leases in the region roll over, Salpoglou said.
“When we see some huge spikes in the availability rate, and we’re not seeing that yet, we’re going to know we’ve got some problems,” he said.
CARES Act Limits Landlord Actions
As lawmakers debate an assortment of new tenant protection laws and eviction moratoriums, a group that represents small-scale Massachusetts landlords is processing what the changes could mean for members’ finances.
The federal CARES Act stimulus package approved March 27 banned late fees and nonpayment filings through July 25, while extending the notice period for nonpayment after that from 14 to 30 days.
Steve Adams
Doug Quattrochi, executive director of MassLandlords, said the legislation doesn’t distinguish between renters who’ve lost income because of the COVID-19 outbreak and others who haven’t, and is written so broadly that it appears to cover virtually every rental property in the U.S. that has a federally-backed mortgage or bank-issued commercial loan.
“The federal government has been in the mortgage market for a long time and in a big way. It’s potentially going to cover every mortgage in the country,” Quattrochi said.
