A wholesome provide of latest residences beneath building or coming available on the market helps to offer renters a break. Leasing is accelerating, however lease progress is slowing.
Condominium completions are anticipated to rise to the best ranges because the Nineteen Eighties within the second half of 2023 and early 2024, in accordance with a brand new RealPage report. Greater than 500,000 a 12 months are anticipated to finish throughout the nation in every of the following two years. Building is happening in markets of all sizes and in all areas, giving renters extra choices.
Which means in contrast to 2021, when it was comparatively straightforward to fill items and retain residents, operators at the moment are specializing in customer support and automation to enhance the resident expertise and maintain occupancy and retention excessive. Thankfully for operators, renter retention charges look like stabilizing once more after a steep fall-off early in 2022. In Could 2023, 52.3% of house renters with expiring leases signed renewals.
Modest lease progress has additionally returned. However in contrast to the standard Could, which is often a time of huge seasonal lease hikes, this 12 months noticed the smallest efficient enhance in over a decade – simply 0.39% month over month. 12 months over 12 months lease progress cooled to 2.3%.
Renewal lease progress additionally slowed for the tenth straight month to six.5% in Could. In contrast to new renters, renewers sometimes obtain a reduction, RealPage said. “However that hole is shortly shrinking, which suggests renewal rents will nearly definitely proceed to decelerate – particularly as operators prioritize retention.”
“What we’re seeing proper now could be that the brand new provide is doing what it’s purported to do – which is put downward stress on lease progress,” mentioned RealPage SVP and Chief Economist Jay Parsons. For the primary time since 2020, he famous, property managers are having to compete for renters.
The report discovered lease progress of latest leases is highest in areas of the nation the place house building is extra restricted, particularly the Midwest and Northeast—areas that often expertise regular markets. In Could, these areas accounted for 12 of the highest 15 spots for annual lease progress among the many nation’s 50 largest metro areas.
Northern New Jersey headed the pack with 7.2% efficient lease change on new leases, adopted by Cincinnati and Indianapolis with lease will increase over 6%. The U.S. common was simply 2.3%.
In distinction, eight main metros reported year-over-year cuts in efficient rents for brand spanking new leases. This group included Phoenix, Las Vegas, Sacramento, Austin, San Francisco, Oakland, Jacksonville and Atlanta. Tampa might quickly be part of them.
