By Andie Lowenstein, Associate Editor
San Francisco—Kingsley Associates’ latest analysis unveiled that renter renewal intent and value for amount paid have continued to decline since Q4 2013. Only 52.3 percent of residents responded that they “probably would” or “definitely would” renew their lease, down 0.9 percent from one year ago. Similarly, only 53.9 percent of renters feel their apartments are worthy of their current rental rate, down 0.6 percent over the same period.
“When we look at time trend analysis, it is quite evident that renters are feeling the effects of sharp rent increases,” said John Falco, a principal in Kingsley Associates’ Atlanta office. “Three years ago, only one out of every three renters cited rental rate as a top decision factor. Today, that figure has increased to 56 percent of renters and has now overtaken location as the top decision factor in the lease renewal process.”
Rental rate data further backs this information. According to research by Axiometrics, the national apartment markets’ annual effective rent growth rate was 5.1 percent in June 2015, which represented a 47-month high. This is probably a contributing factor in the continued decrease in both value for the amount paid and renewal intentions.
Resident perceptions of value for amount paid have declined in nine of eleven major US markets. The greatest decrease took place in San Francisco, where only 48.8 percent of residents observe better than average value for the rent they pay, down nine percent from one year ago. Atlanta and Denver are the only two markets experiencing slight increases in value perceptions, up 0.4 percent and 0.2 percent over one year ago, respectively.
Apartment floor plans and community amenities are noted as top renewal decision factors twice as often today compared to three years ago. Only 13.3 percent of residents in Q2 2012 cited floor plan as a top factor. Today, that figure has increased to 26.8 percent. Also, just 10.7 percent of residents specified that community amenities were a top decision factor three years ago versus 21.8 percent today.
Kingsley Associates surveys more than 3 million apartment renters annually on behalf of its clients. The findings outlined above are based on survey responses received between July 1, 2014 and June 30, 2015. Additional highlights and analysis are available in Kingsley Associates’ Q2 2015 Multifamily Trends.