The apartment industry reached a 10-year high in lease-renewal rates in February, a new report from MPF Research shows. Last month, 55.1% of expiring leases were renewed.
MPF's analysis of lease transactions from its parent company, RealPage, reveals that February 2016 renewals were up 0.1% from those of February 2015, which makes it the 33rd year-over-year increase in the past 34 months. Additionally, there was a 5.0% increase in monthly rents for leases renewed last month.
“We continue to see no evidence of affordability concerns among renters of market-rate, professionally managed apartments,” said Jay Parsons, vice president of MPF Research, in a statement. “Renters are increasingly choosing to renew their leases and are paying a premium to do so.”
By comparison, renewal rates were in the mid to upper 40s before 2010, but more than 50% of renters with expiring leases have renewed in each of the past 26 months. The average rent increase for a lease renewal in that time frame was 4.7%, which is higher than the mid-2000s norms.
“The problem isn’t rent growth in market-rate apartments,” Parsons said. “The problem is the lack of income-restricted rental units for households that couldn’t afford a market-rate apartment even prior to the recent run-up in rents.”
The Northeast and Midwest saw some of the highest retention rates in February 2016. Some of the markets experiencing the greatest increases were the Bay Area and the Pacific Northwest; Denver/Boulder; Sacramento, Calif.; Riverside/San Bernardino, Calif.; Atlanta; and Nashville, Tenn.