Renewal Intent Rises With 55.6% of Residents Likely to Re-up

By February 6, 2019Uncategorized

Renter Satisfaction on a Steady Upward Climb

National renter satisfaction continued its steady upward climb in the final quarter of 2018, which marked a full year of increases in the metric. Before the fourth quarter of 2017, national resident satisfaction had held steady since 2015. This past quarter, however, 77.9% of residents reported “good” or “excellent” satisfaction with their renting experience, which is up only slightly from the third quarter of 2018, when 77.8% of residents were satisfied.

Growth of Residents’ Value for Amount Paid Slows

Residents’ value for amount paid slowed its ascent slightly this past quarter after almost a year of steep increases. Despite the decrease in velocity, value for amount paid is still on the rise. The metric hit 59.8% in the last quarter of 2018, which was a half percentage point increase from the prior quarter. Earlier that year, increases of 1.5 to 2 percentage points quarterly were common from quarter to quarter. At the market level, we see increases in value for amount paid for all markets compared with last year.

National Renewal Intentions Metric Continues Upward Trend

This past quarter there was another large jump in national resident renewal intentions, which rose from 54.9% to 55.6% of residents indicating they’re likely to renew their current lease. At the market level, renewal intentions are also on the rise. Denver, San Francisco, and Miami all saw year-over-year renewal intentions increase at or above 5 percentage points. On the other hand, Washington, D.C., saw a decrease of 5.3 percentage points from the prior year. This is unsurprising after the past two quarters of decline for resident renewal intentions in the District.

While 55.6% of tenants nationally indicate they’re likely to renew their current lease, 20.8% indicate they’re unlikely to renew, and 23.6% are unsure of their renewal decision at the time of their renewal notice. For those residents who are likely or unlikely to renew, their survey comments for community strengths and community improvement areas were analyzed and categorized to determine the top strengths and improvements mentioned depending on renewal intent.

Residents Likely to Renew Are Impressed with the Location and Community Environment

For residents who indicated they were likely to renew their lease, location was the topic mentioned most frequently as a community strength, with 45.8% of residents complimenting aspects of their community’s location. The most common specific community strengths mentioned in relation to location include the community’s neighborhood, the proximity to places residents like to go, and being close to a variety of retail stores. The second topic most cited as a community strength was intangibles, which includes specific mentions relating to privacy and noise, safety and security, and cleanliness and appearance. Residents who decided to stay at their communities come renewal time were most impressed with the location and the intangible aspects of the community.

Residents Unlikely to Renew Are Unhappy About Community Parking and Common Areas

On the other hand, for residents unlikely to renew, the topic mentioned most frequently that the community could improve upon was common areas, with 38.7% of residents criticizing aspects of their community’s common spaces. The specific community improvements most commonly mentioned in relation to the common areas include the parking area, overall building, fitness center, and pool. The second most noted topic was intangibles, with specific mentions relating to cleanliness and appearance, safety and security, and privacy and noise. While these were positive factors mentioned by residents intending to renew, these aspects of a community were also mentioned as negative factors by residents who intend to live elsewhere. Residents who decide to leave their communities come renewal time may have been swayed to stay if common areas and the intangible aspects of their community were improved.

The full industry trend analysis can be found on Multifamily Executive.