While apartment resident retention rates at lease expiration had their ups and downs over the past year, new data from RealPage shows numbers returning to more typical levels across the nation.
For leases that expired in the first quarter of 2021, 53.7% of households opted to remain rather than move. This matches the results seen when averaging the share of households renewing leases in the first quarters of 2018, 2019, and 2020.
In 2020, resident retention levels at lease expiration moved drastically. It soared in April 2020 at 58.4% when lockdown orders were put in place nationwide. Its weakest level was at 51.1% in December.
“As 2020 progressed, renter needs evolved, and many properties began to experience more resident churn,” stated RealPage. “Among the renters working from home, some households opted to move to other neighborhoods or even other metros, taking advantage of the opportunity to save money. In other cases, some households jumped on the chance to upgrade to larger or better-quality apartments, once pricing slipped among a block of the more upscale properties.”
For the first quarter of 2021, lower-priced Class C properties, which are in short supply in many parts of the nation, outperformed with resident retention at 61.9%. According to RealPage, the limited choices for households wanting to move from one Class C community to another usually provides for high retention rates.
Retention for middle-priced Class B stock usually hovers around the industry’s overall average. For the first quarter, 53.4% of Class B households with leases expiring opted to remain in place.
Higher-priced Class A developments typically experience the most renter turnover with households of existing luxury communities tempted by new properties that offer discounts at initial lease-up, said RealPage. However, resident retention when leases expired for Class A in the first quarter was limited to 47.6%.
RealPage noted that it did see differences in performance from one metro to another. Retention is up in some affordable metros where apartment demand is solid and new supply is limited. Detroit and Riverside/San Bernardino, California, saw retention rates in the first quarter increase 8 to 9 percentage points from average levels for the same period during 2018 through 2020. Sacramento, California; Providence, Rhode Island; and Greensboro/Winston-Salem, North Carolina, saw a 5 to 6 percentage point increase.
At the other end, resident retention dropped in expensive metros where rent cuts are encouraging moves. Much of the San Francisco Bay Area saw an 11 to 12 percentage point drop from the first quarters of the previous three years, and retention rate decreases of 6 to 7 percentage points were seen in Seattle, Los Angles, and New York.
