Apartment Renewal Conversions Are on the Move
Digested from RealPage Market Research Blog
Over the past five years, the apartment renewal rate has been trending upward. In March 2017, the national average hit 54.4 percent, up from 52.0 percent in March 2012. Leases renewed in March 2017 included an average 4.5 percent rent increase.
The top 10 metro areas for lease renewals in March 2017 are all in the Midwest and Northeast. Leading the way is Hartford, Conn., with a 66.6 percent renewal rate. Rounding out the top five are Northern New Jersey (63.7 percent); Milwaukee, Wis. (60.0 percent), Detroit (59.9 percent), and Providence, R.I. (57.7 percent). No metro area in the top 10 had a renewal rate below 55 percent.
Meanwhile, the bottom 10 metro areas for resident retention in March 2017 were all in the South and West. San Antonio, Texas, had the lowest renewal rate, at 44.8 percent, followed by San Diego (45.5 percent), Salt Lake City (47.1 percent), Phoenix (47.1 percent), and Denver/Boulder (47.3 percent).
However, markets with lower renewal rates can have stronger revenue growth because higher turnover can create more opportunities to increase rents. In the end, a metro area’s optimal retention rate will be affected by its overall demand.