Landlords offer “creative solutions,” support to struggling tenants
With an eviction moratorium in place since March 18 and the continued closure of businesses throughout Washington state, landlords are offering a variety of options to help tenants meet rent payments that are critical to maintain and operate those properties.
According to a survey of 831 landlords by the Washington Multifamily Housing Association (WMHA), the average percentage of tenants among their properties not paying monthly rent increased from 2.51 percent in March to 10.56 percent in April.
And new survey data from NAIOPWA of 119 properties shows a decrease in payments among both commercial and residential renters – an overwhelming number of landlords who responded to the survey report varying degrees of assistance to tenants. According to the survey, conducted between April 16-17, office and industrial landlords experienced the highest percentage of payments last month; 70.8 percent of office space landlords and 75 percent of industrial property owners reported that at least 80 percent of their tenants paid rent. The highest was the multifamily sector, with 81.5 percent of landlords reporting that 80 percent or more of their tenants paid rent.
“In unprecedented times, new and creative solutions are required to keep the economy moving. The CRE community has taken an active role in supporting tenants,” says Tina Pappas, NAIOPWA board chair. “…In addition to supporting existing tenants, we are committed to safely resuming construction work in accordance with new guidance.”
The NAIOPWA survey also found that 90 percent of landlords are “actively engaging” with tenants to adjust rent payments or are creating payment plans. Around 60 percent of landlords have had tenants extend their lease in lieu of rent payments.
When asked what strategies they used to help tenants, 52 percent of landlords reported adjusting rent, while 59.3 percent adjusted the lease terms. Only 11.1 percent reported making no adjustments.
Similar tenant assistance has been taken by WMHA members such as Weidner Apartment Homes, which has offered payment plans, partial rent and lease extensions. The property management operates in 20 cities through the state. Even before Governor Jay Inslee extended the eviction moratorium on April 16 to June 4, Northwest Select Real Estate Services (NWSRES) operating 20 properties in western Washington ceased rent increases and placed a three-month pause on evictions.
WMHA Director of Government Affairs Brett Waller told Lens that members are “really trying to work with them (tenants) to make sure that they’ll be able to continue to pay their rent so the property can continue to operate at full level.”
Travis Hale is a real estate developer with Panattoni Development Company and serves as its Seattle Partner. He told Lens: “the (NAIOPWA) survey results do not surprise me, as tenants make quick decisions to the sudden change in business and stopped paying all bills. Now 30-60 days into this new world, most industrial tenants are being less affected than originally thought and some are operating at levels that allows them to pay rent.”
Former Bellevue City Councilmember Kevin Wallace oversees development for Wallace Properties. He told Lens that when it comes to both commercial and residential properties, some landlords are struggling to collect rent, “but most aren’t.”
For residential tenants recently laid off or furloughed, part of that may be due to a $600 per-week increase in unemployment benefits from the federal government on top of the state’s share. As a result, Washington state residents are receiving 85-100 percent of their lost wages.
Although the current situation can make it hard for tenants to meet rent and some have even proposed canceling rent, Waller said that rent is not only “is the most fundamental part of a landlord-tenant relationship” but also is critical to effectively manage properties. According the National Apartment Association, landlords receive only $.09 in income from every dollar they collect from rent. Payroll and mortgage together consume $.66 of that dollar.
Restricting rent collection “is going to prevent the landlord from recovering the costs to operate that building,” Waller said. He added that roughly half of rental units in Washington are single family homes. Discouraging long-term rentals will cause landlords to “invest in another state, another market.”
Hale wrote: “We have not seen the full effect of this change in business. We landlords need to be nimble in the coming months so we too can pay our mortgages and bills.”
For Original Article Click Here
