“Worse before it gets better”: Rental agents adapt to new — virtual — reality
In a high-volume, low-margin business, Chicago apartment brokers are doing a fraction of their usual business, trying to conduct virtual tours as the state remains under stay-at-home orders
Broker Megan Gianopulos had a set routine whenever a client would walk into her Apartment People’s office in Lakeview looking for a rental. The two would discuss size and price of apartment and neighborhood, then hop in her car and over the course of a few hours, tour through several properties and areas. She would repeat that a few times a day, every day.
Times have changed.
As Covid-19 has upended the economy and forced several big cities like Chicago into a near lockdown, Gianopulos is now working from home and leading virtual tours.
“Before, social distancing was definitely not a part of this job. Like, not at all,” she said.
Though real estate services are deemed essential businesses under Gov. J.B. Pritzker’s statewide stay-at-home order, Gianopulos’ clients don’t want to see apartments in person, she said. And tenants who now live in those units on the market don’t want strangers walking in and potentially exposing them to the virus. While that business has dried up, Gianopulos is still doing some showings in vacant units, but estimates that leasings have dropped by about 50 percent.
Across Chicago, real estate brokers in what is mostly a high-volume, low-margin rental business are now feeling the pain, sidelined during a time when the local apartment market is usually heating up.
Instead of walk-ins or clients pulled from rental websites, brokers must increasingly look to leads from their brokerages’ marketing teams, then try to close a deal from an online tour. It hasn’t been easy, several of them said in recent interviews with The Real Deal.
Following Pritkzer’s stay-at-home order last week, Luxury Living Chicago Realty suspended all in-person showings. The brokerage — which has 30 agents — had about half as many showings and lease signings last week — before the order — compared to the week before. Those numbers are expected to keep dropping.
Luxury Living’s director of residential rentals, Tristen Heimann, expects April will see a third of the tours compared to the same time in 2019. Most if not all of those showings will be done virtually, which isn’t as conducive for establishing rapport between the agent and their client, he said.
Fewer leads coming in through the brokerage’s various marketing channels, he said, but the clients who do seek their services are more determined to find a home. He’s closed on two virtual-tour deals in the last week, including one in less than a 24-hour span from introduction to lease signing.
“This is the way people will have to find apartments for the foreseeable future,” Luxury Living CEO Aaron Galvin said. Pritzker’s order extends through April 7.
Despite the many obstacles, there is still demand from renters looking to move in the next two to three months, Galvin said, though he anticipates the slowdown will have a “dramatic impact” on Luxury Living’s revenue.
“We believe that, unfortunately, this will probably get worse before it gets better, so the sooner that somebody can get in, the better right now,” Galvin said.
Some tenants whose leases are expiring might be able to convince their landlords to let them extend month-to-month, or give them a short-term lease extension, but others will eventually seek out a new apartment.
Pritzker’s stay-at-home order did call for a halt on evictions and the U.S. Department of Housing and Urban Development said it would suspend all of its foreclosures and evictions through April in response to the pandemic.
Several brokers said they were optimistic that once the virus subsides, business will return to normal and the city’s rental market — which had been booming — will return, bolstered by the recent Downtown job growth.
Heimann said he believes that later in the summer “there will be a pent-up demand from renters looking for a change of scenery after staying inside their apartments for so long.”
Gianopulos agreed, saying she hopes renters will feel comfortable moving again in June and July, and even busier than she was last summer.
“We’re trying to get apartments rented, but we all have to be safe,” she said. “We want to keep our clients safe and keep the current tenants safe, but we still obviously want to secure tenants for landlords. There’s a lot of hurdles at the moment.”