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 [TRDataCustom]. 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