Revenue Management: It’s Not Time to Stop Pushing Rental Rates
If you followed the latest round of REIT earnings results, you probably noticed that several firms talked about a slight uptick in resident turnover. After a couple years of solid rent growth, some residents who moved up in product quality during the economic downturn of 2008-2009 now are getting priced out of the best-quality properties.
Also, a handful of renters are taking the plunge into home ownership now that at least reasonably decent job creation has been sustained for a while. What this all really means is that we’ve reached the stage of recovery in the economy, generally speaking, and the apartment market specifically, where housing choices are beginning to shift a bit.
However, the increases in turnover reported by the REITs aren’t consistent; nor are renewal patterns tracked by MPF Research for the full spectrum of apartment product. Overall retention remains high and are, in fact, still well above normal, pre-recession levels.
So it’s not necessarily time to take your foot off the gas when pushing rental rates. Instead, owners and operators should closely monitor whether turnover stats are shifting at specific properties and, even if they are, whether renter replacements are easy to land at significantly higher rents.