If you’re a renter who has been thinking about taking the jump into a larger or newer apartment, the time may be right to make the leap as landlords scramble amid shrinking rental demand.
According to a CNBC report, demand is falling short of supply by 100,000 units across the country, according to a survey by RealPage, a real estate analytics firm. RealPage’s Jay Denton notes that there is a good supply of available units at just-completed projects.
“Also, top-tier existing projects are losing performance momentum for the first time in this market cycle. Some renters from established luxury projects are opting for the newest deliveries in order to take advantage of rent discounts often offered during the initial lease-up process.”
With demand on the wane, landlords are sweetening the pot. In New York City, some landlords are increasing amenities and even offering concessions. Gabby Warshawer, director of research for CityRealty.com, a New York City real estate listings and analytics company, said most of the concessions are monetary — a month or two of free rent — but some landlords are getting creative.
“What we’re seeing more of now is discounted deposits in addition to free months of rent. You only have to put down $500 or $1,000 deposit. It impacts what people are looking at, and that sweetens the deal for a lot of people. There are also stray offerings for gift cards — a $1,000 MasterCard gift card when you sign the lease or, in some cases, free access to the building’s amenities package.”
Concessions are hitting the luxury apartments, but growth is solid lower down the rent scale. Denton points out that older rentals, dubbed the Class B properties, in the close-in suburbs still see strong pricing.
“Top-tier projects in neighborhoods with the most construction are struggling to push rents at all. In many metros, that’s especially true in the urban core. However, Class A product rent growth is still substantial in desirable suburbs adding comparatively modest new supply.”
Markets also play a key factor. In Sacramento, Calif., rents are up 9.8 percent. Other markets seeing similar increases include Seattle, Washington, and San Bernardino, California. Coming in at about 5 percent growth are cities like Charlotte, Denver, Minneapolis and Tampa. This impacts real estate investment trusts, according to Gaurav Mehta, a multifamily REIT analyst at Cantor Fitzgerald.
“We continue to expect the largest supply increases in New York, the strongest job growth in Orlando and the highest rent growth in Seattle.”