Rental Rate Overtakes Location as Top Renewal Decision Factor
SAN FRANCISCO–(BUSINESS WIRE)–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.
About Kingsley Associates:
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Peggy Robinson, 770-908-1220
President of Marketing