AvalonBay boosts concessions amid surge of new rentals

Residential REIT cut projections, citing weak job growth and increased supply

New York /
Jul.July 27, 2016 12:44 PM

Amid a surge of new rental product coming to market, AvalonBay Communities quadrupled the amount of concessions it offered to tenants in the second quarter and cut its revenue forecast for the rest of the year.

The Virginia-based residential real estate investment trust offered $300,000 worth of concessions in the form of free rent, mostly in places like New York, northern California and New England, Crain’s reported.

“We did not see the same seasonal lift we’ve seen in prior years,” CEO Timothy Naughton said on the company’s second-quarter earnings call Tuesday.

The REIT scaled back its full-year forecast for revenue growth by 0.4 percentage points for communities open a year or more as a wave of new apartments hit the market across the country. Job growth was also slower than the company expected, COO Sean Breslin said.

Manhattan is expected to add 5,675 apartments to the rental inventory, most of it luxury product, according to Citi Habitats TRData LogoTINY. San Francisco is expected to add about 5,100 new apartments this year, the most in 26 years.

Breslin added that rent growth in New York has been “stubbornly slow.” “There’s just not enough high-paying jobs being created to absorb all the new supply,” he said.

Avalon is partnering with the city Department of Education to develop an Upper East Side project that will include 1,100 rentals as well as two new public schools and 20,000 square feet of retail space. [Crain’s]Rich Bockmann


Related Articles

arrow_forward_ios
The Corcoran Group’s Kunal Khemlani (left) and  Brown Harris Stevens’ Joshua Young with (from left) 47-05 Center Boulevard in Queens, 70 West 37th Street and 605 West 42nd Street (Rockrose, CityRealty)
Take my apartment, please! Luxury rental concessions are back
Take my apartment, please! Luxury rental concessions are back
Harbor Group International's Richard Litton with 500 Town Green Drive (Avalon Communities, Harbor Group International, Getty)
Harbor, Azure buy Westchester community
Harbor, Azure buy Westchester community
AvalonBay CEO Benjamin Schall in front of 1455 Valley Road in Wayne, New Jersey (AvalonBay, LoopNet, iStock)
AvalonBay’s 473-unit New Jersey project advances
AvalonBay’s 473-unit New Jersey project advances
UDR President Jeffrey Davis, AvalonBay Timothy Naughton Equity Residential's Sam Zell (LinkedIn; AvalonBay; Getty)
Investors bank on urban real estate comeback
Investors bank on urban real estate comeback
MeetElise CEO Minna Song (Linkedin)
MeetElise, an AI-powered leasing startup, raises $6.75M
MeetElise, an AI-powered leasing startup, raises $6.75M
New York City Council Speaker Corey Johnson (Johnson by Rob Kim/Getty Images for Food Bank For New York City; iStock)
City Council to intro package of bills providing eviction, rent relief to tenants
City Council to intro package of bills providing eviction, rent relief to tenants
AvalonBay breaks ground on $77M Harrison complex, journalist Scott Pelley to sell Darien home and more Westchester & Fairfield real estate news
AvalonBay breaks ground on $77M Harrison complex, journalist Scott Pelley to sell Darien home and more Westchester & Fairfield real estate news
AvalonBay breaks ground on $77M Harrison complex, journalist Scott Pelley to sell Darien home and more Westchester & Fairfield real estate news
Long Island Cheat Sheet: Nassau’s Laura Curran discusses development and Airbnb, environmental review delays Belmont Park project… & more
Long Island Cheat Sheet: Nassau’s Laura Curran discusses development and Airbnb, environmental review delays Belmont Park project… & more
Long Island Cheat Sheet: Nassau’s Laura Curran discusses development and Airbnb, environmental review delays Belmont Park project… & more
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...