E38: A Deep Dive Into Rental Demand Across Canada

"What blew me away was really how much demand there was for these smaller markets. Even when you take Covid, work-from-home, and everything out of the picture, how much more per property demand there is in some of these small communities." — Matt D'Avirro

Data isn't very useful if it's not accessible or effective at communicating a message. It's just a bunch of numbers after all. That's why Matt D'Avirro, Marketing Operations Manager at Rentsync, is instrumental in using data and automation to make sales and marketing easier, and help influence future business decisions. That's why it's no surprise that Matt also conceptualized Rentsync's National Rental Demand Report, which maps demand throughout the country.

In this episode, Matt walks us through the impetus for this report and offers insights into how developers and marketers can best use it. We dive into some of the trends that have occurred over the last year, like COVID, work from home, and a boom in smaller markets. Matt talks about the implications of these trends and why they should be looked at from a long-term perspective. Wrapping up, we talk about what property developers should be focussing on, and Matt speculates what the next few months have in store.

Tune in today to hear it all!

Key points from this episode:

• Get to know today's guest, Matt D'Avirro, and what his role entails
• The origin story of the National Rental Demand Report
• Differentiating between leading and lagging indicators
• Some of the ways that Rentsync's data is unique
• Unpacking the major trends of the past year, including Covid, increased demand, and more
• What is driving demand in high-growth areas in Canada
• A trend that has been the most surprising to Matt
• The importance of looking at alternative rental strategies
• Where developers should be placing their focus right now
• How marketers can make the most out of this report
• What would surprise Matt the most in the upcoming months

Links mentioned in today's episode:

Matt D'Avirro on LinkedIn
Rentsync National Rental Demand Report
podcast@rentsync.com

If you liked this episode, be sure to subscribe or follow Sync or Swim wherever you get your podcasts, Apple, Google Podcasts, or Spotify.

Episode Transcript

[0:00:47.9] NS: Welcome back to Sync or Swim. I'm your host Nicolina Savelli and in this show, I take a tactical approach to helping those in multi-family and prove their marketing and advertising efforts. Today, I have Matt D'Avirro with me, who is the marketing operations manager her at Rentsync. Welcome to the show Matt.

[0:01:05.9] MD: Thanks for having me Nic.

[0:01:06.2] NS: Now Matt, your title I must say, definitely underplays the work you do here at Rentsync and before we dive into this conversation, I think it's important for listeners to fully understand what it is you contribute to, in order to provide just a better understanding of what we're going to talk about in this episode. Do you mind telling us a little bit about your background and really, what your core function is on the Rentsync growth team?

[0:01:32.1] MD: Absolutely. Here at Rentsync, I am the marketing operations manager, what that means is basically, I use a combination of data and automation to help make our sales and marketing team's lives easier. I try and smooth out these sales process as much as possible to help our sales team bring the clientele in the company and I also clean, sort through and make our various data sets more actionable to the various teams we work with across the company.

[0:02:06.4] NS: Perfect, I think that data point is also, is going to be the core discussion we have today because I asked you to be guest on this episode for a couple of reasons. First, you can tribute immensely to our national rental demand report which helps developers and marketers get a sense of where demand is moving across Canada. 

Second, nearly after a year of doing the report, we just added some new data to it which I think we want ed to try and highlight and speak to so that people knew it was available to them. Before I joined Rentsync and I'm going to give you this credit, you had originally come up with the concept of tracking rental demand using our data. Can you tell me a little bit of the origin story of the report and why it became a necessity for us to start working on?

[0:02:53.9] MD: Thanks, Nic, I appreciate that and I'm proud, this is a little bit of my brainchild and = 

[0:02:59.2] NS: Absolutely.

[0:03:00.0] MD: Something here so yeah. We have an enormous amount of data at our fingertips here at Rentsync on the Canadian rental market and rental market in general and I, you know, among the team here in Rentsync, we're tasked with finding a way to measure the demand for rental units and various markets and make it sharable and digestible and valuable to our clients.

[0:03:25.0] NS: Yeah.

[0:03:25.9] MD: I'm a big Toronto Blue Jays fan, big fan, big sports fan and you follow enough sports, especially baseball and they have a statistic for everything, they have crazy math and numbers and highly advanced stats that go into measuring player performance.

[0:03:46.7] NS: Sure.

[0:03:48.3] MD: Baseball specifically, there's a statistic called WAR, which stands for, wins above replacement but basically, what it does is it measures every contribution of baseball player makes to their team winning, pitching, hitting, fielding, defense and it boils it down into one single number, which is usually a one digit number. You're not getting crazy decimal places, you're not getting into the hundreds, it's a player was worth seven WAR is a phrase in baseball.

My thinking around this project was, how can we boil this demand down into one easy short number that we can measure. You know, together with some team members here at Rentsync, we developed the formula for demand score and the demand report was kind of born there.

[0:04:46.9] NS: Absolutely. I mean, I had no idea that that was the brain child that emerged but that makes so much sense, knowing you that that was kind of how you thought about boiling down demand into one score because there are obviously a lot of factors but being able to just kind of take away that one really prominent number and say, this is an indication of demand is a really simple way for helping people get a sense of the market and the cities that are growing or not growing or taking shape right now.

Obviously, the report has taken on a life of its own, originally, I think we were just trying to help marketers see if there are leads we're in line, what the market they were advertising in, whether or not they were hitting industry benchmarks or not. Now it's actually gone one step further and is a source for developers to get a sense of the emerging markets.

Would you agree that over the last year, that's kind of now been the predominant message of this report?

[0:05:47.2] MD: Absolutely and I think there's tremendous value there. Our good name, data is very unique, right? We can actually measure with a huge sample size or a good level of confidence in it, where people are looking to rent. That's what we call a leading indicator, right? Previously, data that's been available has been lagging indicators. It's been where rents are increasing. Where vacancy is low or high. But these are all happening after the fact.

[0:06:18.3] NS: Right.

[0:06:18.9] MD: you want to know ahead of time, where the interest is and that in turn will lead to lower vacancy and higher rent rates.

[0:06:27.8] NS: Yes. 

[0:06:28.1] MD: That data is extremely valuable to a developer because if they do spot an outlier. Somewhere where the demand score is higher or is increasing month over month or year over year where it's not really expected. That could be a market that's primed and ready for new rental units that can generate above market rental rates and that just means a better ROI for the developer.

[0:06:54.4] NS: Absolutely. I mean, I started doing this report not knowing, not anticipating that this was going to be the outcome and I'm so glad it is because so many of our clients are those people and they rely on this heavily for their kind of, just a month over month snapshot but you don't know how it's impacting their meetings.

They could be saying well, this is what's happening and this report is really contributing to that now. It's important for us to be as accurate as possible and I do think it's important to say, just how much data is actually being gathered from this report. It's not one source, it's basically every source of rental distinct in Canada we're gathering information from and able to boil it down into something that's manageable and people can take away from.

In university, you needed at least three sources, we're well beyond that when it comes to sighting our data.

[0:07:52.0] MD: Absolutely Nic, you're right. We have so much reach in the Canadian rental listing market that we can collect all that data and get a really meaningful sample and you're right. I think it's born out of that, the value is there and the confidence in stride.

[0:08:08.2] NS: Right, now, we're going to move on to some of the trends that have come from this report which I know we're not experts, we're not economists but I think that we can probably – we've been analyzing data pretty regularly now that we can come up with some pretty good indications of trends and things moving forward.

What would you say are the most important trends that have come from this report over the last year and I have obviously, my own ideas on this as well.

[0:08:37.8] MD: Yeah, you know, I have gone back and forth on this a little bit and we made about the economist but I feel like we think we are sometimes. Obviously, the biggest trend has been COVID and then the bounce back we're seeing now in our August manned report, you'll see a lot of large year over year increases for various markets. Some markets as high as 500% year over year increases in demand which is –

[0:09:06.4] NS: Which is crazy because eight months ago, I was reporting a deficit in demand in some of these areas and now, it's like, the surge and demand is really come full force in the last month or two.

[0:09:20.2] MD: Absolutely. You know, for perspective, the average across our entire data set for August 21 versus August 20 is 165% year over year increase in total demand. In Canada, we're seeing 1.6 times the demand this summer than we were last summer essentially.

That says to me, renters who six months into a goal pandemic, they were staying home, they delayed moving out from their parent's basement. They held on to whatever living arrangements they did out of caution. Now they're back and they're back with a vengeance and property manager, yeah, property managers should be excited, cautiously excited.

[0:10:08.7] NS: Cautiously excited and another thing came out of this and I've mentioned it not a lot on the podcast but real estate has gone up so much that those who were living in their parent's house, they might not have enough money to go and buy up a place so the amount of renters, the sheer number of renters I think are just – has grown over the last year and a half because people can't afford to buy.

That surge is happening just because of the real estate market itself. People are now renters, once who thought they could have maybe purchased two years ago have been saving up, are realizing they need a few more years, if not, a lot more years to save. They are renting and another part of that is that these people do have money, it's not that they're not willing to spend on rent, they have money, they just don't have enough to put a hundred and fifty thousand down on a house yet.

Most of them are professionals, they're working professionals who are making money so property managers should know, they do have an opportunity here to really capitalize on who is renting now.

[0:11:23.8] MD: Yeah, you're absolutely right Nic, you know, it's unfortunate that these people aren't able to get in a house even if they want to but at the same time, as property managers and marketers, use the data, find situations that will be appealing to them, market to them, build to them and you'll come in and talk.

[0:11:44.0] NS: Yeah. Now, we recently added rent rates to the report. Which for me became a question I was asking myself every time I did the report, is demand a reflection of affordability? Originally, my hypothesis was yes but obviously, there's a number of factors that contribute to demand besides affordability.

What do you think is driving demand in certain markets right now? For instance, we've seen Oshawa Ontario on top of the demand report for quite a few months. What do you think is the major driving factor and I know affordability is also a part of that, is there anything else that you think is contributing?

[BREAK]

[0:12:31.7] MD: I feel like it's probably been talked about ad nauseam between our show and every other media outlet everywhere but the work from home movement is such a huge factor and it's people realizing they can move from a high cost area to a low cost area. 

[0:12:47.8] NS: Yep. 

[0:12:48.6] MD: I think the data bares that out. We are seeing crazy growth in "remote places." 

[0:12:56.7] NS: Totally. 

[0:12:57.1] MD: We're not seeing growth in outlier communities. We are seeing growth in the suburbs of major cities and even the small communities outside of those suburbs – 

[0:13:07.7] NS: Commuter cities if you will. 

[0:13:09.2] MD: Yeah, exactly and we're seeing the definition of commuter city expand as those cost increase and as things move out wider. People are deciding to make that short move from that big market into the smaller market for cost savings and now that they know that they can work or even study from home. No one really expect this to be working remotely for this long but I think it's really how to shift culture wise and I think businesses and developers need to recognize that it is not like a short term play anymore. 

It is a life change that many people are sticking with and it's an opportunity for new developments that may not have been attractive areas to start going now. 

[0:13:59.4] NS: To your point as well, a lot of these cities have started to accommodate those people coming into them with better transportation, more train access, you know, hourly versus every three hours getting to and from cities. I think obviously for developers to be aware of which cities have made those accommodations or who have plans to make those accommodations are obviously those should be the places that they're looking at because those are where renters are going to continue to go. 

If they can get in and out of their city fast, they're going to rent there. If they have accommodations nearby transportation, they're going to rent there. Developers need to be aware of that and make the most out of that convenience for them. 

[0:14:52.0] MD: Absolutely. I think we're not putting the toothpaste back in the tube here, right? This is here to stay and we got to adapt. 

[0:15:01.2] NS: Totally, so over the last year and maybe for the sake of repeating yourself, what would you say has been the most surprising trend? 

[0:15:10.1] MD: You know, I think when we started this report what blew me away was really how much demand there are for properties in these smaller markets even when you take COVID work from home and everything out of the picture, how much more pro-property demand varies in some of these small communities. You know, we do the top 10 every month and it is kind of been a running joke between you and I that the city I live in, you know, beautiful well in Ontario has been pretty consistently in the top 10. I think it dropped out this month but it is – 

[0:15:47.1] NS: It did this month yes but it's been there and we've seen in other news articles, things that have come up and the price of housing and everything has just shot up and that is a reflection of our report is just predicting that month over month that that's what's happening. 

[0:16:03.5] MD: Totally. I mean, when you boil it down it makes sense. There is people retiring the GTA and selling their million dollar homes and coming to live in beautiful Niagara, you know there is young people who are choosing to have a little longer commute to some of these bigger communities like the Burlington or Hamilton and they'll make that commute to save and kind of more affordable cost of living and there's college and university, lots of students especially now looking for a place to live for the next semester and there's not a ton of supply available. 

It only makes sense that demand is going to shoot up and developers can use that to make decisions and the number of construction cranes I see around well and is evidence that they are using that information or making decisions in that vein already, so that's exciting to see. 

[0:17:03.0] NS: Yeah, no, kind of just a side note, I saw recently someone posting on Facebook marketplace looking for their sister for a place to rent for $500 in Hamilton and they were looking for a room. They were just looking for a room to rent but the comment section underneath was like, "Good luck, good luck, good luck." I find that really sad that that's our perception and I think that developers need to take notes of that kind of lack of affordability in these areas and that this shouldn't be an impossible task. 

I had an interview with Arnab Dastidar about co-living. I feel like the opportunity for co-living is super untapped in a lot of markets and I think that if developers or property managers can understand the value of renting per room, they can actually make more money off of that if they do that and create an opportunity for renters to find affordable accommodations so that is not like a running joke, "Oh we are never going to find a room to rent for less than $500 a month." 

These are students trying to just get their foot in the door. They've literally maybe had a minimum wage job in their lifetime, how do you expect them to afford any more than that? All you're going to do is get people defaulting or not paying their rent and then you're going to have a vacancy later on, so you don't want that. You are just having to fill units again, which is a whole other thing that you have to deal with, which that's a cost to you as well. 

[0:18:37.2] MD: Yeah, I mean that's a great point and that kind of alternatives and different strategies for renting is definitely something to help or should be looking into to tackle that affordability issue as well. 

[0:18:49.5] NS: Yeah, now hypothetically if you were a developer looking at this report, what would your next move be? I feel it's provided us with a good grasp of the Canadian rental market. Are there any cities that you feel or areas that you feel are really great opportunities for developers right now? 

[0:19:09.1] MD: Sure, we kind of mentioned that these commuter communities are seeing high demand as people spread out and so keep that in mind. Monitor the report, the demand, like I said, keep an eye out for those outliers. Some communities demand shooting up, doubling in a month or something like that, why is that happening? Can you jump in there? Is it too early, is it too late or it doesn't make sense? The other thing is we've talked about the work from home movement, keep that in mind when you develop and when you build. 

Build units that make sense for someone who is going to be potentially not leaving their house in the entire day. Balconies, I like two bedrooms, maybe one isn't massive, it's an office and lots of light and space. That will really entice that young professional work from home renter into those spaces and you will be able to get the return on those. 

[0:20:14.0] NS: Yeah, absolutely. Now, if you were a marketer what would be the first thing you'd look at to help you make the most out of this report? I kind of mentioned it earlier but we can maybe take a little step further because it really was the reason we created the report. 

[0:20:29.4] MD: Luckily Nic, we may not be economist but we are marketers. 

[0:20:33.7] NS: But we are marketers, yes. 

[0:20:34.9] MD: I think we have some insight. I think for me, the first thing I would look at is almost the opposite of it if you are a developer. If you are a marketer for a property manager and you see demand falling in a market where you have vacancies and properties that you need to fill, get a jump on your competitors. Put out promotions, invest more in advertising, put incentives for move ins. You know our clients put some amazing incentives that will capture renter's eye. 

You know, move in cost paid for free Internet for a year, gift cards for hundreds of hundreds of dollars and it will swing a renter towards you earlier for sure and the cost will be worth it in the end absolutely for you. I would say use the data to get a jump on where you may be seeing vacancies in the future and respond accordingly. 

[0:21:33.5] NS: Yeah, I think that's an amazing point to make for marketers because if you're seeing an area just whether it's COVID, whatever it could be that's causing just maybe a deficit in renter's during a period of time, you can totally get a jump on it by looking at those numbers in the report, seeing how you can leverage your marketing to ensure vacancies don't remain high in your area because there is a lot of things you can do to avoid that. 

[0:22:00.5] MD: Absolutely, marketing is kind of easy when demand is high. It's when demand is low you really have to –

[0:22:06.8] NS: Get creative. 

[0:22:08.0] MD: Yeah, get creative, exactly. 

[0:22:09.7] NS: Yeah, absolutely. Now finally, if you could predict rental demand for the remainder of 2021, there's a lot of factors here, a lot of things that we don't know, what do you think we'll start seeing moving forward or maybe an easier question is, is there anything that could surprise you if something happened? For the next four months out of the year, what would surprise you the most in rental demand? 

[0:22:33.4] MD: Well, you know adding to our resume here, are we virologist as well? I think that's the top question. 

[0:22:41.9] NS: Yeah, that is yeah. 

[0:22:43.5] MD: There is talk of a fourth wave and there is evidence of a fourth wave more than talks, so I would really monitor closely what trends are happening not just in our report but you know there are data sets that are widely available if you look online. Prediction, you know I'm an optimist. I hope we see rent rates dropping in our primary markets to a point where demand returns, where it becomes affordable to live in these big markets and we'll see an evening out of things of markets, of demand across the board. I hope that's what happens. I can see a path where that happens. 

[0:23:25.3] NS: Yeah, we don't know. You picked a hard question to ask and I think the biggest surprise, if this happened my biggest surprise would be that primary markets go right back to the way they were before COVID that remote work dies and that's all just long gone and that we revert back to two years ago. I don't think that that's going to happen so that would be the biggest surprise for me if it did. On that note, Matt it's been a pleasure chatting with you today. 

Before you go, can you just let listeners know where they can connect with you, maybe if they have any questions about the demand report you can help them out but yeah. 

[0:24:04.0] MD: Thanks Nic, it was a pleasure to be on here. I was excited when you asked me to make my podcast debut, I listen to enough of them. 

[0:24:12.0] NS: Your first hopefully not your last episode. 

[0:24:14.5] MD: Yeah, you know, if we want to talk Blue Jays or website SEO, I can speak to those topics as well. If anyone out there listening wants to reach out, they can find me on LinkedIn, my name is Matt D'Avirro, send me a connect and I am happy to connect and respond and answer any questions. 

[0:24:34.3] NS: Awesome. Well thank you again for taking the time to join me on this episode of Sync or Swim and on that note, keep swimming. 

[END OF INTERVIEW]