Fair warning:
I’m going to make some brutally honest assumptions about what most of us are feeling and thinking. I’ll proceed with some terrible near-term predictions, and I’ll wrap it up with what will feel like some wild, contrarian, and insanely optimistic conclusions. Some of you will hate this. Some of you will love it. I’m either right or wrong, and only time will tell.
If your 2020 was anything like mine, it started with almost limitless optimism for 2020. Businesses were booming, people were traveling, and everyone needed housing. It was going to be a banner year! As we all know, that quickly faded into depths of despair not seen since the Great Recession or 9/11. Collectively, it’s likely worse. Countless news cycles discuss the actual virus, sickness, death, lack of personal connection, politics, etc., and I’ll leave that to others. I’m here to talk about what will happen in our world - temporary, corporate, serviced (whatever you call it), housing.
The extreme financial pain many of us are experiencing is, in part, no fault of our own. The winners (survivors) and losers (bankruptcy or fire sales) from COVID-19 will not be chosen by historical precursors of success such as customer service levels, survey scores, quality, efficiency, risk mitigation strategies, or sound decisions, but by dumb luck: lease expiration dates, the willingness of landlords to negotiate, geographical location (local policies and lockdowns), and our ability to secure gap financing or grants. Some decisions and pivots can swing the pendulum, but not to the degree that we have spent a lifetime basing our expectations.
What most of us are and have been thinking:
- We’re all screwed forever, and life as we knew it is over.
- Business travel is never going to recover.
- The world has concluded that Zooms are just as good as in-person meetings.
- Remote work is a great and long term solution for everyone.
I couldn’t disagree more.
"Be fearful when others are greedy and greedy when others are fearful." - Warren Buffett.
What will happen in the immediate-term, and most of it is really bad:
- Available units in circulation will continue to plummet, and most of us will continue getting smaller and smaller.
- There will be a day of reckoning when eviction courts open and money judgments secured, and there will be bankruptcy filings as a result.
- These bankruptcies will reverberate through our industry both from within the provider world and within the multi-family community.
- Relationships will sever, trust will be lost, and things will look bleak
Stick with me here.
“The darkest hour is just before the dawn” - Thomas Fuller.
What will happen in the medium-term, and most of it is really good:
- People will finally admit that video calls are exhausting and lack the personal touch required to facilitate significant, lasting, and innovative solutions. Company leaders will realize they can no longer groom “rising stars” or even effectively train new hires. Company culture will start to fade, and employee productivity will fall. Innovation on the scale we’re accustomed to will have ground to a halt. As Nomad Temporary Housing CEO Gavan James recently pointed out via a Linked In comment, “Ever been to a client meeting where someone takes you aside after a meeting? Ever had a spontaneous lunch meeting after a meeting? Sometimes those are priceless and are not happening at the same frequency as today.” He couldn’t be more right.
- Soon, we will start to vaccinate the front line and the most at risk. As hospitalizations and death count fade, confidence in travel, and the desire to truly connect again will inversely rebound.
- Intern programs, business travel, and consulting will fire back up. I can feel the pent up demand in my gut, and I won’t let anyone tell me that flame doesn’t exist, to some degree, within everyone. We are sick of this.
- Confidence will return.
See, it’s not all bad.
"The way to get started is to quit talking and begin doing." -Walt Disney.
"When you reach the end of your rope, tie a knot in it and hang on." -Franklin D. Roosevelt.
Final Thoughts:
- Corporate housing providers will be scared out of their minds to expand moving forward.
- The multi-family partners we work with will be reeling from write-offs and will be briefly unwilling to let us expand at the scale required to support our clients.
- We will continue to rent apartments to our clients for rates that, a week later, will seem insanely low.
- There will be a temporary housing inventory squeeze, the likes of which we’ve never seen.
- Pricing will rebound, and profitability will scale at unprecedented rates aided by efficiency gains we’ve implemented to weather this storm.
- The days of true and constant partnering is not only a fact of life, it’s a part of our survival. It will increase.
- Life will return. We will all see each other again. We. Will. Rebuild.
Conclusion:
Hold on tight, my friends. This will be a dark winter in our world, but I couldn’t be more bullish on our collective future. I, for one, am going all in.
This article was originally posted on December 14, 2020 on LinkedIn. Find the original posting here.
