AvalonBay boosts concessions amid surge of new rentals

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

TRD 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

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

AvalonBay nixes Columbus Circle rentals, pursues condos instead

AvalonBay considering $150M condo play at Columbus Circle rental tower

Is Sheepshead Bay’s resi development boom causing an office shortage?

What happens to concessions when it’s time to renew a lease?

Next stop for Brooklyn’s development boom: Sheepshead Bay

Summer rental surge won’t be strong enough to impact concessions

arrow_forward_ios