June 2021

By Les Shaver

As the country reopens, labor continues to be a significant concern for apartment executives.

Before COVID-19, the apartment industry was facing a battle for talent. Management companies were bidding for the best and brightest onsite staffers, especially maintenance technicians. Then the pandemic hit and unemployment skyrocketed, hitting almost 15% in April 2020. Since then, the joblessness rate has fallen to roughly 6% in March 2021. Throughout this roller coaster, the industry’s labor problems haven’t subsided. As the country opens back up, labor again appears to the top worry for apartment management executives. Filling those critical onsite spots, especially on the maintenance team, seems to foremost on their minds. “Talent is still the biggest pain point,” says Yakov Belousov, Executive Director of Operations at Pegasus Residential. “We as an industry are continuing to realize that at every level, especially at the maintenance department.” The labor concerns aren’t just about filling open spots, which is still a major concern. There are other issues that keep management executives up at night. Following are five things they are most concerned about as they look to the second half of 2021.

1. Filling Open Roles

For many managers, the top challenge coming out of the pandemic is filling open onsite roles, particularly hourly positions. In some cases, collecting unenhanced unemployment benefits has been more attractive to people than working, according to a number of people in the industry. “Some of the site-level positions are right in the same income bracket as those who have been affected with the government’s support,” says Julie Brawn-Whitesides, Executive Vice President, Property Management at San Diego-based ConAm. “So how do you motivate those people to quit waiting on the next stimulus and encourage them to come back in [and work]?” While Brawn-Whitesides says those stimulus programs were necessary, eventually, people will need to come back to work. “People who truly want to work and who are going to contribute successfully will be rewarded through our compensation programs and community company culture,” Brawn-Whitesides says. “But it’s a struggle right now, especially on the maintenance side.”

Douglas Eisner, Co-Founder and Managing Director of apartment owner The Calida Group, is seeing payroll costs increase from his managers. He takes a more optimistic view of the situation, seeing a potential hiring frenzy as a sign of strong, recovering apartment market. “I wouldn’t say it’s pandemic related as much as it is recovery related,” Eisner says. “Everyone was on pause in 2020. Now people are getting back to business. So, all of a sudden, people are all restarting construction projects and expanding their firms again with thorough hiring. This is just the natural employer competition for great employees that you see in any kind of expanding market. The market is expanding nationwide so quickly that demand is exceptional right now.”

2. Compensation Challenges

When it’s difficult to find associates, one of the most obvious steps is evaluating compensation and pay. Despite the pandemic, Belousov says salaries continue to rise. Two years ago, he says a maintenance technician in Atlanta or the Carolinas could earn $17 or $18 an hour. That has increased to $21 or $22 per hour. “Everything continues to increase,” he says. But taking steps to increase compensation isn’t easy in this environment. The pandemic has forced managers to buy personal protective equipment, implement health checks and offer additional services during the past year. Making things even more difficult is that massive job losses and eviction moratoriums mean many managers aren’t collecting the same revenues as they have in the past. “The elephant in the room is these eviction moratoriums because there’s really nothing that you can do and it creates a moral hazard,” Eisner says. He acknowledges that “there are some people who genuinely are affected and who generally are suffering,” but there exists another segment of residents who could otherwise pay but are taking advantage of the situation. “And that is frustrating. So, I think that’s probably one of the bigger challenges.” The end result is that managers are getting squeezed on both ends with expenses increasing and revenues decreasing. “Through the pandemic costs have increased, with reasons varying from labor-related challenges to COVID supply needs, and this has happened in tandem with some revenue fluctuation caused by state and federal level moratoriums,” says Sarah Oglesby-Battle, President of Farmington Hills, Mich.-based Beztak Properties’ Residential Division. For some firms, these revenue and expense changes may make it challenging to offer raises.

3. Refilling the Talent Pipeline

There are other ways to fill the talent pipeline if raising pay is difficult. During the pandemic, apartment managers continued to employ different strategies to fill their onsite roles. As the country reopens, expect those efforts to intensify. Like many companies, Pegasus is also looking at alternative staffing models that would reduce onsite personnel by operating from a centralized location and leveraging technology, such as artificial intelligence, chatbots and call centers. Pegasus is also focusing on “hiring people that know people,” as Belousov puts it. “When you hire someone who is great and they have a network, you’re really hiring them and their network,” he says. But that’s not all. Pegasus is also working on programs to develop a career path for maintenance technicians by focusing on both trade schools and high schools. “We’re developing programs where we’re able to go to high schools and build relationships with these guidance counselors and create fun and exciting videos to show how cool the maintenance field is,” Belousov says. “We want to create a path for these folks to learn everything on the maintenance side and the leadership side so that they have an opportunity to develop into maintenance supervisors and regional maintenance people.” Many companies are prepared to raise salaries when necessary. “We’ve consistently subscribed to third-party compensation reports and have strategically focused on salary planning in the upper quartiles per position,” Oglesby-Battle says. “This, in tandem with an even greater focus on strong career pathing programs, has made the organization a desirable home for those seeking longevity. When these strategic practices are coupled with technology-based mediums that meet the expectations of convenience our residents now robustly seek, and a training platform to use them, we find ourselves more attractive to a variety of potential talent.” home for those seeking longevity. When these strategic practices are coupled with technology-based mediums that meet the expectations of convenience our residents now robustly seek, and a training platform to use them, we find ourselves more attractive to a variety of potential talent.”

4. Back to the Office

Companies across the economy are weighing when to bring workers back. Apartment companies are facing similar decisions, especially with corporate staff. Rachel Davidson, Executive Vice President at Austin, Texas-based RPM, says the apartment industry was slow to adopt telework and other flexible policies, but the pandemic changed that and showed that staffers could be productive at home. “One of the bigger focuses and challenges is going to be finding the right balance instead of just trying to return to normal,” Davidson says. “I think companies who just open back up and say that people are required to be back in the office are going to face challenges retaining top talent and even attracting top talent.” If companies correctly navigate the return to the office, they can gain an edge in the battle for talent. “Those who actually make a change and create a new normal are going to have an advantage because your workforce is going to expect that,” Davidson says. For ConAm, modifying their return-to-work policies and reconfiguring how regional and corporate support teams connect will be a huge priority. Brawn-Whitesides says some associates are comfortable and productive at home, while others can’t wait to get out of the house. “We want to thoughtfully modify our return-to-work practices to meet the needs of the company, our associates and their families.”

5. Eviction Moratorium Concerns

Management executives also need to be concerned about morale, as if filling open spots isn’t hard enough. After onsite teams worked diligently through the deadly pandemic when many people toiled from home, they now face the difficult task of potential evictions. Brawn-Whitesides says that the company’s standards for addressing nonpayment of rent have for many years remained consistent and followed Fair Housing professionalism. “But at the same turn, we’ve had to modify our practices to ensure that we are bound by whatever has legally been placed before us.” Brawn-Whitesides says it has been challenging for onsite teams to “wrap their heads” around applying different standards and changing their mindset. “We’ve looked hard at who is affected and what we need to do to provide an unparalleled level of service despite their inability to pay,” Brawn-Whitesides says. But when moratoriums expire, Brawn-Whitesides thinks it will be a challenging time for onsite associates. “I think it’s going to be an emotional time,” she says. “I think it’s going to affect our associates. I also think that it’s going to affect their neighbors. I’m concerned about it.” But most of all, Brawn-Whitesides is concerned about the industry’s site-level staffers. After more than a year of facing potential COVID infections, being understaffed and having to perform tasks that they would never have imagined, like doing temperature checks, it’s no surprise that some of them may be overwhelmed. “I’m concerned about leveling out the burnout of our site-level associates and keeping them motivated and refreshed in their endeavors,” Brawn-Whitesides says. Les Shaver is a freelance writer.