Page 87 - AAGLA-JAN 2022

Property Management
Leasing Whiplash!
Techniques for a Strengthening Market
OAmid rising rents and tightening occupancy, operators see a hybrid future.
By Les Shaver, for the National Apartment Association
n a national level at least, the numbers Leasing Comfort
say the apartment market took off over the summer. Just look at the July figures from RealPage: During the month, rents grew 8.3% year-over- year across the country—the most significant jump since the booming 2000-2001 era. At the same time,
occupancy tightened to 96.9%—also the highest seen since the 2000-2001 era.
While performance in individual markets and product types varies, national fundamentals are predicted to remain robust in 2022 and even 2023. RealPage projects 15 markets to post rent growth of more than 10% during the next two years, and many other markets should see rent increases in the high single digits.
On the ground, many apartment operators are experiencing these increases across their portfolios. “You’re hearing a lot of noise about market rent increases and how much they’re going up,” says Cindy Clare, Chief Operating Officer for Bell Partners. “Keep in mind that some of that is a recovery from the drops from last year. But some of it is absolutely true market growth.” Regardless of whether the rental market is just recovering from rent decreases in 2020 and early 2021, today’s leasing agents are now dealing with a market that has flipped from just 16 to 18 months ago. They’ve gone from trying to keep heads in beds to pushing rents while still working around eviction issues (which could be inflating occupancies). Fortunately, many of the technologies deployed during the pandemic should help them continue to lease apartments more effectively regardless of the economic climate.
Clare isn’t alone. Other firms have seen robust rent growth across their portfolios. “Rent growth has been robust across all markets and projects,” says Greg West, Chief Executive Officer of ZOM Living. “The velocity of growth has been surprising, as has been the absorption of new apartment deliveries. The pandemic did stall absorption for some time, but it also delayed new starts, which has created an environment of supply shortage in most markets.”
While concessions became commonplace during the pandemic, they’ve now burned off. “For the most part, the only deals offering concessions are lease-ups on merchant builds that want to accelerate the pace to get to an occupancy they can market for sale,” West says. Even with 2020’s rent increase, Clare says some leasing agents remain nervous about asking for increases. “We haven’t seen these types of increases in many years,” she says. “Coming off last year, it is a little bit of a whiplash. So, it makes our teams nervous, but they also recognize their occupancies are high and people are coming in and paying the rent because we’re at market.”
But Clare says her leasing agents are getting more comfortable that these rent increases are market driven. “Our occupancies are high, so people are feeling much more comfortable about their leasing and getting residents in the door,” Clare says.
Wood Partners has seen rents jump across its entire portfolio this summer, including some surprising places. But some of that is beginning to moderate. “We have seen rents increase even in areas we expected to see a slower recovery, such as Portland, San Francisco, Oakland and Washington, D.C.,” says Steve Hallsey, Executive Vice President of Operations for Wood Residential Services. “However, rents are starting to
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