SAN FRANCISCO, CA - Kingsley Associates' latest analysis reveals 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.
According to John Falco, a principal in Kingsley Associates' Atlanta office, “When we look at time trend analysis, it is quite evident that renters are feeling the effects of sharp rent increases. 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 supports this finding. According to Axiometrics' research, the national apartment market’s annual effective rent growth rate was 5.1% in June 2015, which represented a 47-month high. This is likely a contributing factor in the continued decrease in both value for amount paid and renewal intentions.
Resident perceptions of value for amount paid have declined in nine of eleven major US markets. The greatest decrease occurred in San Francisco, where only 48.8 percent of residents perceive better than average value for the rent they pay, down 9.0 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 cited as top renewal decision factors twice as often today in comparison with three years ago. Only 13.3 percent of residents in Q2 2012 cited floor plan as a top factor. Today, that figure has grown to 26.8 percent. Similarly, just 10.7 percent of residents indicated that community amenities were a top decision factor three years ago versus 21.8 percent today.
Kingsley Associates surveys well over 3.0 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.
Source: Kingsley Associates / #Apartments #Multifamily