By Jessica Fiur, News Editor
New York—Apartment residents are less likely to renew their leases, according to Kingsley Associates’ Q2 2011 mulitfamily resident survey. In 2010, 65 percent of people surveyed reported that they would “probably” or “definitely” renew their leases. This number has been on a steady decline since. During the period of the survey, ending on June 30, 2011, only 61.4 percent of the surveyed residents noted that they would renew.
The decline indicates that renters are reacting to the higher rents in the past few years, a practice that was spurred on by property managers because of both the economy and low apartment vacancy rates.
“Since relatively little new development has occurred in the past few years, the supply of apartments has been stable,” John Falco, principal, Kingsley Associates, tells MHN. “Our clients have been able to raise rents and maintain occupancy despite the sluggish recovery.”
Indeed, according to the Kingsley survey, rental rate was the most frequently cited reason for renters to choose not to renew their leases. Other cited factors for not renewing included community management (24.9 percent), and apartment features finishes (24.3 percent). Of those likely to renew, location was cited as the most important factor (73.4 percent).
The survey also showed that New York and Chicago have the largest number of apartment renters who are most likely to renew their current leases. The residential renewal intent was 78.9 percent in New York and 65.8 percent in Chicago.
Don’t expect rents to become stabilized, or for the residential renew intent to increase any time soon, either.
“We have heard from several of our clients that they are actually lowering retention targets and raising rents using yield management software. Others are seeking higher rates of renewal to drive down costs associated with turning units over,” Falco says.
“In both cases, achieving higher customer service levels leads to greater resident satisfaction and loyalty, which makes demand less elastic. This allows owners and managers to maximize revenue through higher rents, whether those rents are coming from renewing residents or new ones.”