Nevada is quickly approaching the two-year mark since the beginning of the COVID-19 pandemic. From government mandates, social distancing, supply delays and a staffing crisis nationwide, business in the Silver State has had to adapt and change. Many industries were hit hard by these changes, including property management. But, in post-COVID Nevada, the industry is on its way up.
Nevada is growing, and so is the property management industry. Despite COVID and the numerous challenges it presented, Nevada has become a hotspot for business as more people call the state home.
“Nevada is a prime place to be because it’s not taxed as heavy and so, for businesses, it’s much better,” said Jessica Jardine, partner at Commercial Project Management. “They want to be here, so they’re coming over here, they’re taking spaces. The market is very high, so you’re paying a lot more per square foot for the spaces.”
This competition for space is being seen in both the industrial and office sector as many property managers report having units leased out before the current tenant has even left. Delays in new construction due to a shortage of staff and supplies have also limited the spaces available for tenants to move into. And, the demand for flexible work schedules as a result of working remotely during the pandemic is a contributing factor to the scarcity of smaller office space.
“We are seeing tenants that are running their businesses requiring less employee space,” noted David Jewkes, principal/ managing director of Avison Young. “That is going to be something that will be with us long term.”
While this unprecedented growth in Nevada bodes well for the property management industry, its sustainability is unknown. “It’s a little scary though,” commented Jardine. “When you grow fast, there is so much change and the price per square foot is so high. When is it going to level out? Nobody knows.”
Communication is Key
In March of 2020, Governor Sisolak issued an emergency eviction moratorium for residential and commercial landlords. On the commercial side, the impact was minimal.
“A very interesting observation we made here in the Nevada market is that, most of our tenants who are regional or local based, did not take advantage of the moratorium of paying rents,” said Jewkes. “I’m sure there were some, but not very many, certainly, in the portfolio that we have,” said Jewkes.
According to Meaghan Levy, director of property management services at Newmark, those tenants who were directly impacted by COVID were able to work with their landlords to maintain their tenancy. Levy said, “For our properties, we were able to negotiate with tenants to, either reduce the rate at term, or even forgive an absent term and just find a way we could work together to get through it.”
Although Governor Sisolak’s eviction moratorium did not have a significant impact on the commercial sector, the residential sector has still not recovered. While landlords have faced the impossibility of paying their mortgages without receiving rent, homeowner association’s (HOA) property managers grappled with how to maintain communities without collection activity.
“A lot of our boards have had to make very difficult decisions, as I’m sure individual owners did, for maintaining their properties,” said Courtney Murphy, owner at Community Management Group. “They had to cut services. They had to make very difficult decisions as to the necessities for our developments. A lot of projects have been put on hold.”
HOA property managers are now resuming collection efforts, however the delay on community projects is ongoing as Nevada faces a staffing crisis and significant shortage of supplies.
Keeping it Clean
As many businesses have returned to their offices, maintaining clean and sanitary work locations has become a priority for property managers – and an expectation for tenants. While general cleanliness of common areas was the acceptable norm before, the bar is much higher in post-COVID Nevada.
Many property managers have increased their budgets to include installing touchless antibacterial dispensers throughout buildings and providing face masks to incoming guests. Additionally, the frequency of janitorial services has increased dramatically and proven to be expensive for property managers.
“It’s a lot harder to find people and we are paying them more,” said Levy. “For the owners and for the tenants, our operating expenses actually went up. Even now we are seeing it with fallout from individuals who have chosen to not come back. Day porters and janitorial workers have taken this time to retrain, retool and maybe do something different. That is definitely a longer-term impact for us. We are seeing our budgets increase at a minimum of 20 percent in janitorial, and in some cases as much as 40 percent. That is a driver of the personnel needing to be paid more so we can compete with the hotels and casinos who raised their rate proactively.”
Not too High-Tech
Advancements in technology have had no significant effect on property and community management aside from implementing sophisticated accounting and budgetary systems. While technology is at the core of many industries, property and community management continue to rely heavily on basic tenant and resident communication.
“Property management is the core business, said Jewkes. “It is taking care of problems and making them go away. [Technology] has not really been that impacted. It is still very hands on and people centered.”
The use of existing technology increased dramatically during the pandemic as property and community managers sought to adhere to government directives regarding social distancing.
“We’ve had to come up with different ideas to work around some of the new rules,” said Murphy. “For example, [the rules] said only 50 percent could be in the pool at one time. We had to come up with a technology program where residents had to register to go to the pool before they could show up there. That was not required before. We came up with a program where they could go online, register to use the pool and fill out waiver requests.”
Property managers also began to invest and implement existing technology to limit physical contact with common surfaces in buildings. Many property managers installed sliding doors or keyless entry with the use of tenant fobs.
“Some of our buildings converted to an intercom system,” reported Jardine. “Especially in the multi-tenant building, each tenant had the ability to allow people access to the building, so we didn’t have random clients or people walking around.” Many property managers also invested in more sophisticated websites for tenant communications that included paying rents and requesting repairs.
Is it Safe?
In the height of the pandemic, property managers faced the challenge of organizing their buildings in such a way that encouraged social distancing and yet remained functional for tenants. Common areas were, perhaps, the most affected with property managers limiting the number of people who could be in elevators, closing stalls and sinks in bathrooms and removing chairs in sitting areas. Focusing on air quality and flow in buildings also became a priority.
“We increased our outdoor air intakes, in addition to having the right sized filters and changing them as recommended, based on your building load and the manufacturer. We added UV lighting in some cases,” said Levy.
Although property managers engaged in a variety of building conversions to slow the spread of COVID, it was the tenants who bore the main responsibility of creating safe work environments based off their individual company protocols.
Jewkes explained, “For the most part it goes back to the tenants, whether they are industrial or retail. You will see on their doors ‘this is what you need to do when you enter our space.’ We’ve got tenants that have vaccination mandates. They’ve got all kind of protocols that they operate with, but that isn’t something that we tell them to do. That is something we are observing as they are tenants in spaces that are being managed by us.”
While many tenants simply closed their doors and worked from home, others attempted to maintain a sense of normalcy by continuing to work at their offices. Some tenants created split schedules for employees, separated desks and closed common areas, and yet others made more extreme changes.
“We totally revamped our office space,” commented Murphy. “We made sure there was only one person in each area. We made sure everybody had masks, we made sure that our entire office had new hand sanitizing stations everywhere. We made sure our break room was shutdown. We made sure that everybody knew that only one person could be in the kitchen at a time. We had new policies put out so that safety was the number one priority.”
As businesses become more familiar with operating inside a pandemic and offices start to reopen, tenants are beginning to feel comfortable in workplaces again. While the office environment may have changed permanently, many are finding ways to incorporate the important aspects of in-person work and culture back into their businesses. Through all of these issues and changes, for commercial real estate owners and tenants, property management companies remain the first line of defense in creating safe workplaces.