New Yorkers moving in face of steep rent hikes

Equity Residential’s renewal rate in NYC down, but new tenants filling units

New York /
Apr.April 28, 2022 01:00 PM
Mark Parrell, CEO, Equity Residential, in front of 105 West 29th Street (Equity Residential, LoopNet, iStock)

Mark Parrell, CEO, Equity Residential, in front of 105 West 29th Street (Equity Residential, LoopNet, iStock)

As demand for their units increases, landlords are raising rents at renewal time, prompting more tenants to walk.

Sam Zell’s Equity Residential saw its renewal rate drop 5 percentage points from the beginning of the year to 60 percent, Bloomberg reported. The lessened renewal rate is a sign renters are taking their chances on finding cheaper lodging than re-upping at a much higher rate than they initially signed on for.

The market is competitive, though, and those seeking cheaper digs are likely settling for less. Appraiser Miller Samuel and Douglas Elliman put the first-quarter vacancy rate below 2 percent, while rents surged 25 percent year-over-year.

In the New York area, Equity has hiked up rents for both renewals and new agreements. The net effective rent hike for first-quarter renewals was 21 percent, up from 14.5 percent in the fourth quarter of 2021. For new agreements, net effective pricing rose 29.7 percent.

Despite the aggressive increases, Equity isn’t sweating its search for tenants. On an earnings call, the REIT’s CEO, Mark Parrell, said the company was “easily able to attract new residents at these higher rates.”

Tenants have been scrambling following the expiration of many Covid-era bargains. Many who can’t afford steep increases are migrating to other parts of the city, while new renters arrive to fill the vacancies, giving the advantage to landlords.

“Landlords have the ball in their court,” Compass agent Carlos Aldana recently told The Real Deal. “They’re offering aggressive renewals and if that renter says no, they know that they’ll be able to achieve it elsewhere.”

Meanwhile, bidding wars accounted for one in five new lease signings last month, according to Miller Samuel. More inventory is expected to hit the market in the spring and summer.

As for Equity, it appears to be less interested in the city’s rental market than it once was. The Chicago-based REIT is looking to sell a five-building portfolio of Manhattan and Brooklyn rental buildings for more than $750 million, The Real Deal reported. Parallel said during the earnings call that the company plans to reduce its holdings in New York and Washington, D.C., although it hasn’t commented on the portfolio listing.

[Bloomberg] — Holden Walter-Warner





    Related Articles

    arrow_forward_ios
    CHIP executive director Jay Martin (LinkedIn, iStock / Photo illustration by Priyanka Modi)
    Landlords called it: Vacancy rate jumps, rent-stabilization stays
    Landlords called it: Vacancy rate jumps, rent-stabilization stays
    Related CEO Jeff Blau and 455 Tenth Avenue (Chris Martin, Google Maps, iStock)
    Related launches lodging for executives’ hybrid work
    Related launches lodging for executives’ hybrid work
    Matt Lauer with 26, 28 & 32 Actors Colony Rd (Getty, Susan Breitenbach)
    Matt Lauer finds buyer for languishing Hamptons estate
    Matt Lauer finds buyer for languishing Hamptons estate
    Barbara Russo, Danielle Englebardt, and Oren and Tal Alexander (Getty, iStock BFA)
    Ranking the top residential brokers on the Upper East Side
    Ranking the top residential brokers on the Upper East Side
    From left: PropTech's Thomas Hennessy and Joseph Beck; Appreciate's Chris Laurence (Appreciate, LinkedIn/Tom Hennessy, LinkedIn/Joseph Beck, iStock)
    Single-family rental platform Appreciate to go public in SPAC deal
    Single-family rental platform Appreciate to go public in SPAC deal
    From left: Douglas Elliman's Scott Durkin, Stephen Kotler and Avi Dan-Goor (Douglas Elliman, iStock)
    Douglas Elliman bets on Vegas in westward expansion
    Douglas Elliman bets on Vegas in westward expansion
    366 State Street and 37 Sidney Place in Brooklyn (Corcoran, Zillow)
    Passive house asking $15M tops Brooklyn contracts
    Passive house asking $15M tops Brooklyn contracts
    100 Eleventh Avenue (iStock, Rhododendrites/CC BY-SA 4.0, via Wikimedia Commons, Illustration by Kevin Cifuentes for The Real Deal)
    Lower-end listings dominate Manhattan’s luxury deals
    Lower-end listings dominate Manhattan’s luxury deals
    arrow_forward_ios

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

    Loading...