U.S. Temporary Living Challenges: What You Need to Know (Part 1)
Like many aspects of global mobility, we are now seeing an increase in activity across all areas, including the need for temporary living and long-term rental solutions.
Here we discuss the current challenges, what Cartus is doing to overcome them, and key recommendations that organizations can follow to help reduce the impact on mobility programs.
As mobility programs return to pre-pandemic levels, there has been a significant rise in demand for rentals coupled with low availability for accommodation of all sizes. Rental rates also appear to be rising across much of the U.S. when compared to pre-COVID prices, which is impacting both single family homes and apartments. Following are some of the key challenges in the U.S. temporary living market:
- Due to high demand for long-term leases, many properties can be challenging to rent on a month-by-month basis. Those properties that are available for short-term occupancy typically charge higher rental rates.
- 2020 saw fewer corporate housing suppliers holding long-term inventory in an effort to reduce the risk of vacant units. Some are now beginning to strategically rebuild their inventory as demand starts to return, while others are adopting a “match lease” model that sees them rent an apartment for a specific customer need. Both of these factors have an impact on the number of units available for short-term rental and the cost of corporate housing across the U.S.
- High demand coupled with less flexible lease terms is also having an impact on corporate housing suppliers’ ability to grant lease extensions as frequently as they used to.
- In addition to an increase in traditional relocating employees entering the market, temporary living is proving popular among people given the option by their employers to work from anywhere, with many choosing to relocate to a different area outside of their home location.
- With an increase in the number of requests for larger accommodation and single family homes, the rental market is experiencing particularly high levels of demand, with low availability exacerbating the situation. Three-bedroom units appear to be especially popular as customers are in need of the extra space to work remotely. Unfortunately, there have always been fewer multi-bedroom accommodations available—even pre-pandemic—so sourcing these property-types can be very challenging.
- Delays in international shipments have caused a shortage in rental furniture used by corporate housing suppliers to furnish units they offer.
- As occupancy levels remain high (and are expected to do so in the coming months), organizations should be mindful that it will take longer to source temporary living options. This additional time should be built into relocation schedules.
- Preparedness remains key. If your organization’s relocation program includes temporary accommodation then ensure your budget reflects potential extra costs and let your relocation services provider know of scheduled moves as early as possible. Currently, we aim to give suppliers four to five weeks’ notice prior to the expected move-in date.
- Where possible, organizations should try to ensure their U.S. relocation program has the flexibility to adapt to the current challenges (e.g., moveable start/end dates, longer lease terms, wider scope of area to search for temporary living accommodation).
- Booking a longer lease on a property may ensure more options and better rates overall. Organizations with significant volume into the same location may consider block-booking temporary accommodation (i.e., renting a block of units and moving employees into the accommodation on a rotational, short-term basis). This helps to reduce cost and guarantees availability.
- For last minute moves, consider allowing your relocation services provider to make a decision on the property selection based on set criteria outlined by your organization.
Recommendations: Relocating Employees
- Flexibility is key. Manage your employees’ expectations. Relocating employees should be made aware of the current challenges before they begin looking at temporary accommodation.
- Once a relocating employee has found a suitable property we recommend they make a decision quickly (within hours instead of days).
- A degree of flexibility with regards to property criteria is also recommended. The more challenging the request (e.g., “three-bedroom property within a specific commutable distance school district”) the fewer choices available.
- Temporary living is typically in and around major metropolitan areas. Set the expectation that accommodation outside of major metropolitan areas will be even more limited than before.
- If a lease extension is required, it is imperative that employees respond timely to “notice to vacate” requests. Current demand levels make last minute extension requests less likely to be accepted.
How Can We Help?
- We are ensuring our supplier partners are kept up to date with any future moves so they have ample time to prepare and support our clients’ relocating employees.
- We are working closely with our supplier partners to garner on-the-ground information, including current demand levels and specific locations where temporary accommodation is particularly low in availability. Overall, we continue to be able to offer choice to our customers despite market challenges.
- Our Cartus consultants are aware of the current challenges and are managing expectations when counseling relocating employees.
We anticipate these current trends are not a permanent market change, but a result of pent up demand building during the pandemic. Organizations should expect the challenging conditions to continue for the near term before we return to pre-pandemic levels.
Cartus will continue to work closely with our selected temporary living providers to ensure we minimize the impact this situation may have on our clients and their relocating employees and will update our clients of any further developments.