Anyone else seeing lower than normal Occupancy in MF deals recently. Even in Class A newer properties. I know concessions are running out, but seems a ton of deals dropped out of stabilized an are almost back to the 85% threshold for Lease up.
With the large amount of Construction in MF coming to market is really going to hurt current deals as in lease up those properties will be brand new with amazing concessions. Just saw a property looking for perm debt and had been at 97% occupied towards end of summer, concessions ended, they refused to lower rents and had their higher rents in place. Now sitting at 88%, going into the slower rental season. 260 Unit Class A near DC. Within this area same PM group has a 450Plus unit building within 5 blocks of this property and at least 10 other MF buildings going in over the next 4-5 years or finishing constructions.
Wondering peoples thoughts on if rents will have to be lowered or just occupancies will naturally work themselves out after the new properties hit the market.
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Been seeing our Austin TX and Atlanta, GA properties all hovering in the +/- 88-92% range. Generally have been able to maintain occupancy a tick above 90%, but with no meaningful rent growth, so treading water for occupancy.
We're not offering any meaningful concessions, but on the mid to late 2010s product we own the new supply coming online are offering significant concessions which puts the net effective rent in line with our gross rents. Austin and Atlanta don't have the stickiest tenants, so tenants are hopping ship to take advantage of a new place for a year at the same cost. I wouldn't expect them to be long term tenants at those properties.
Northeast and Mid-West properties are performing better from an occupancy standpoint. These tenants tend to be much stickier generally based on the trends we've observed.
It's crazy we just did a Refi on a MD property near DC. Built like 2010, when we did the Acquisition for them the building had leased up for 15 months at that point. There was a waiting list to get into certain properties, Studios and the 2beds that have 2.5 baths. Now they are floating around 89%ish and have every configuration open for rent now not even in pre lease. It's just crazy I know certain areas expanded dramatically, I'm interested to track the surround Boston Metro area as it has a ton of inventory coming on the market or recently did, with you saying it's stickier in the NE.
Rents do not go down. Stop it.
Haha they won't but def had a deal be pushed 2 months now because it won't get over 90% occupied.
Follow up was living in what they wanted to call a class A property in Yardi, was turning into a class B property, anyways small 1bed was $2900 a month all in with parking and the "trash fee", they raised it to $3600 in June 23 on us.....I argued they didn't care. I showed them print outs of their information in Yardi and RCA. They stopped talking to us. Moved to a townhome not far away, closer to the downtown, safer area. They unit went unleased 3 months past our move out date and saw it offered on the website for about $75 bucks less than I had been paying. Win Win for me, but they got to 86% occupied in December, back up now.
People forgot about seasonality. It was gone for a few years, but is back across the US. A lot of property managers and asset managers a) forgot about it, b) are too young to remember it, c) are too lazy to manage around it. Smart operators were filling their deals up in the fall, even if it meant dropping rate some, so that they didn't have to drop their pants in January, and that will let them push rate in the spring. Also, supply impacts all classes of assets. Thanks for coming to my TED talk.
You multifamily people are hilarious. You'd rather let the boat sink at 85-90% occupancy than lowering rents SLIGHTLY to achieve 95%+ occupancy.
I'm generally asking because my end accounts won't buy the ACMBS if there is low Occupancy or they'll bid it back
Sorry commented wasn't directed at you particularly. I just see this a lot and it doesn't make much sense to me/is irrational
If the boat is sinking at 85%-90% occupancy, you have infinitely bigger problems than rent
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