The perks of renting

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This article was published 26/04/2021 (1692 days ago), so information in it may no longer be current.

Pack up, you’re moving. Your new landlord will pay for the U-Haul. They might even waive a month’s rent or give you a $1,000 credit. In Toronto, one property manager will sweeten the deal with a stocked wine fridge. In Montreal, one property manager is offering potential tenants two rent-free months, plus a paid-for “tandem skydive” experience; If students sign a lease by the end of April, they get a free microwave or a pair of AirPods.

Anything it takes to fill a unit.

With a high supply of available rental units, low migration, an increasingly appealing housing market with historically low mortgage rates, a renting public more aware than ever of the virtues of savings, and a general desire for more space amid the pandemic, landlords are hoping incentives will sweeten the pot and get tenants to sign on the dotted line.

“Right now, there’s a lot more supply than there is demand,” said Paul Danison, the content director for Rentals.ca, where property managers across the country are more frequently and aggressively highlighting their incentives. “And these landlords are trying to compete for the best tenants.”

In Winnipeg, where the vacancy rate is nearing four per cent, renters may not get helicopter rides or bottles of sauvignon blanc when they move in, but a cursory search of listings on Kijiji and other rental sites shows a growing list of more traditional incentives like paid moving costs and bonuses.

To move into a two-bedroom suite at The Onyx on Pembina, first open to occupancy in February 2020, Ironclad Properties is offering one month of free rent, a $500 gift card to Amazon, $500 in credit for the on-site car wash, and $250 in credit for the building’s Starbucks kiosk.

“The incentives we’ve put into place are really to provide awareness and get the Ironclad name out there,” said director of marketing and communications Tamara Soroka, who said incentives were being offered before the pandemic at Ironclad properties. “We’ve found success with them for sure. The incentives are definitely a draw.”

The building is already laden with other perks — a theatre, games room, rooftop barbecue, steam rooms — but in the current market, mid- to upscale properties like it are utilizing incentives to draw attention to existing amenities and stand out from the competition.

At its St. Vital Villa apartment building on Beliveau Road, Marwest Management Canada Ltd. is offering new applicants $500 off the first month’s rent if they move in before May 1. In Fort Richmond, the Polo Club apartments are offering $1,000 Visa cards for successful applicants to select suites.

The competition between a large number of property managers over a small number of interested renters means such extras could be the difference between a suite sitting empty for months or filling up in a matter of weeks.

“Do the incentives work?” Danison asked. “I don’t know for sure. But I know we see these units move, and my assumption is that they wouldn’t be offered if they weren’t successful.”

Avrom Charach, the spokesperson for the Professional Property Managers Association of Manitoba, said in conversations with landlords around the city and province, he’s heard that the incentives do in fact make a difference.

“In the last two to three days, I’ve spoken with five or six other companies, and every one is either offering or just finished offering an incentive program,” said Charach, a senior manager with Kay Four Properties Inc., which recently ran a cash-back incentive program for their properties as well.

“Incentives aren’t as crazy here as in other jurisdictions, but there are certainly incentives,” he said. If rents for competing properties are nearly identical, what will sway a tenant? “Maybe, that free moving van.”

“(Incentives) get people in the door, and then you show them what you can offer as a property manager,” he added.

While COVID has incentivized incentivizing, Charach said move-in bonuses and perks predate the pandemic, and the market was headed in this direction before as well.

For much of the 1990s and 2000s, Charach said, vacancy rates here were in the range of one per cent, a rate stabilized by a lack of new housing starts in the rental market. By 2018, vacancy reached 2.9 per cent. As of October 2020, the local vacancy rate was at 3.8 per cent, up from 3.1 per cent in 2019.

At one per cent, the market favours the property manager: with fewer units up for grabs, those available units garner significantly more attention from applicants — not much need for incentives at that point. As that percentage ticks upward, the market moves toward an equilibrium point. But above three per cent, the scales start to tip, and units that may have once essentially leased themselves by virtue of their availability need at times to make their case more appealing through cash and moving trucks.

Charach said this is especially the case with more expensive properties, as that clientele could also afford to buy. “You have to figure out how to attract someone who says, ‘Couldn’t I buy a condo?’” he said. “You have to incentivize more at the top end than the bottom.”

In Winnipeg, the top is growing faster than the bottom: the Canada Mortgage Housing Corp.’s most recent rental market report said over the past two years, 2,465 rental apartment units were added in Winnipeg, with an average rent of $1,576. “This rent would be affordable to individuals with a before-tax income of $63,000,” the report’s author wrote — too expensive for over two-thirds of renter households in the city.

And as rents increase, so too does the likelihood that the units are vacant. The CMHC calculated that units in Winnipeg deemed “affordable” — with rents costing 30 per cent of monthly income — for those making less than $25,000 per year had a vacancy rate just under three per cent. For units deemed “affordable” for those with an annual income of $80,000 or more, the vacancy rate neared 14 per cent. This parallel suggests higher demand for more affordable units than for new high-end apartment units, which have to compete with a strong market for rental condominiums and home ownership.

Thus, wine fridges and skydiving, or moving vans and free months’ rent, become ever-important tools for property managers angling to fill empty units.

“There are some asterisks — they might not pay for a U-Haul from another country,” Danison said. “But I think it shows landlords really are wanting the best tenants.”

Charach said incentives give property managers an edge, a conversation starter, and an opportunity to show renters what else — quality living spaces, long-term stability, amenities, security, a proven track record in business — they have to offer.

“Don’t let an incentive be the only reason you rent,” Charach said. “People have to be astute customers.”

ben.waldman@freepress.mb.ca