Things may be slowing down slightly for multifamily businesses, and renters seem to be better off for it. Kingsley Associates third quarter report shows satisfaction and renewal intent are only getting better.
Renter Satisfaction Continues to Increase
Kingsley Associates' latest analysis reveals that 76.8% of apartment renters nationwide rated their overall satisfaction as "good" or "excellent" for the four quarters ending September 30, 2016, reaching an all-time high. At the market level, Dallas and Miami saw notable increases in satisfaction, with 1.5% and 1.1% jumps, respectively. New York saw the largest decline in satisfaction, with 78.1% of residents satisfied this quarter, a decrease of 2.8% from one year ago.
Renewal Intent Increases for First Time in Three Years
Renewal intentions have remained at a low level over the past three years but increased this quarter for the first time since the end of 2013. 52.3% of residents indicated that they “probably would” or “definitely would” renew their lease, up from 51.4% in the previous quarter. This aligns with rental rates decreasing in September for the first time since 2015, according to Yardi. Washington, DC saw a 5.8% increase in renewal intent from 2015 Q3 and has reached 60.0% this quarter. New York’s decline in satisfaction has also been followed by a decline in renewal intentions. More than half, 53.4%, of New York residents indicated they were likely to renew, representing a 2.4% decrease from 2015 Q3.
Renter Renewal Decision Factors Differ Depending on Renewal Intent
Overall, renter renewal decision factors have remained level or increased in importance from one year ago when looking at resident feedback holistically. Among residents who are unsure of their renewal intentions, rental rate remains the top decision factor at 65.9%. For those same residents, location has increased in importance by 2.1% to be the second most important renewal factor. For residents unlikely to renew, rental rate is at the top of the list at 59.1%, but has decreased by 1.1% from last year. Community management remains the second most important factor at 31.0%.
Among residents who are likely to renew their lease, 73.2% indicated location was a factor, up 2.2% from a year ago. Location has now become the most important decision factor among residents likely to renew. Residents likely to renew are placing less emphasis on rental rates and increasingly identify location as their top factor. While 65.9% of residents who are unsure of renewal and 59.1% residents who are unlikely to renew report rental rate as a top factor, only 49.1% of residents who are likely to renew cite it as a top renewal decision factor.
Resident Satisfaction with Community and Apartment Features
With community appearance, apartment features, and community amenities consistently appearing in the top factors influencing renewal decisions, owners and managers must ensure that residents are pleased with community and apartment features. After a slight decrease in 2013, the percent of residents satisfied with the overall condition of their community and apartment has steadily increased over the past three years. Resident satisfaction regarding the condition of their community has increased 5.6% since 2012, with satisfaction in 2016 hitting an all-time high of 82.3%.
While resident satisfaction with community and apartment conditions has increased overall, satisfaction has decreased with respect to several community features. Landscaping, exterior appearance / cleanliness, and amenities / services have decreased in satisfaction by 2.3%, 2.7%, and 3.1%, respectively, since 2012. However, residents have been more pleased with their apartment features over the last four years. Resident satisfaction with floor plan design / layout, kitchen appliances, and paint / wall treatments has increased by 0.9%, 5.2%, and 4.3%, respectively.
In both 2012 and 2016, location tops the list with the highest percentage of resident satisfaction amongst all community and apartment features. This comes as no surprise given that location is the top renewal decision factor for renters who indicate they are likely to renew their leases.
