April rent collections were better than expected. It could get scary for landlords in May
As unemployment claims across Illinois rise, property managers fear single-digit declines in rent collections could widen next month
Most Chicago landlords have collected enough rent to make it through April relatively unscathed. But May could be a very different story.
“We think April is going to be pretty good, but we’re all pretty concerned about May,” Kass Management Service’s Gary Kass told Crain’s.
Kass company manages roughly 6,000 apartments in the Chicago area, and said April rent collection is in the range of the upper 80 percent, down from the normal low-90 percent range. Rent checks are more plentiful in the North Side than in poorer neighborhoods, he said. But if job losses continue at current rates, collection could drop significantly, landlords said. With few programs to help them pay the mortgage, taxes and insurance, defaults could be on the horizon.
Landlords say they’re already nervous about tenants who will have been out of work for weeks being able to pay for housing in May. Many property managers, including Mac Properties, which has been the target of a rent strike, say they’re working with tenants and offering relief to those with legitimate hardship claims. But they’re doing so on a case-by-case basis.
Peak Properties, which manages about 8,000 units in Chicago, told Crain’s that it’s asking tenants who need assistance to pay half their April rent now. The management company is willing to split up the reminder, with payments added to future rent bills. Roughly 5 percent of their tenants have asked to defer rent payments, according to Peak. Some have even asked for a break on the May and June rents. “Our response is, ‘Let’s get through April first,’” said Mike Zucker, managing partner of Peak.
Aside from issuing moratoriums on evictions, state and city officials to date have resisted calls to halt rent payments, citing legal reasons. Mayor Lori Lightfoot’s administration recently initiated a $2 million emergency housing fund, though it’s currently only equipped to issue grants to about 2,000 recipients. [Crain’s] — James Kleimann