As demand for their units increases, landlords are raising rents at renewal time, prompting more tenants to walk. Sam Zell’s Equity Residential saw its renewal rate drop 5 percentage points from the beginning of the year to 60 percent, Bloomberg reported. The lessened renewal rate is a sign renters are taking their chances on finding cheaper lodging than re-upping at a much higher rate than they initially signed on for. Appraiser Miller Samuel and Douglas Elliman put the first-quarter vacancy rate below 2 percent, while rents surged 25 percent year-over-year. In the New York area, Equity has hiked up rents for both renewals and new agreements. The net effective rent hike for first-quarter renewals was 21 percent, up from 14.5 percent in the fourth quarter of 2021. For new agreements, net effective pricing rose 29.7 percent.
Tenants have been scrambling following the expiration of many Covid-era bargains. Many who can’t afford steep increases are migrating to other parts of the city, while new renters arrive to fill the vacancies, giving the advantage to landlords. Meanwhile, bidding wars accounted for one in five new lease signings last month, according to Miller Samuel. More inventory is expected to hit the market in the spring and summer. You can read more here.
The current rental market is the most challenging we have seen in years. We expect that many would-be renters will choose to buy instead. Our team is keeping a pulse on both the rental and sales market and will keep you updated on the ups and downs!