Inflation is hitting all economic sectors and in the rental area it has its particular characteristics, because according to Mark Parrell, the CEO of Equity Residential, in New York more apartment tenants are refusing to renew their leases. leasing as they are presented with post-pandemic rate increases.
In information released by Bloomberg, the executive director of the real estate company, noted that deal seekers are “opting for move instead of paying the current higher price”.
But for Parrell the situation does not worry them: “It is not a concern since we can easily attract new residents to these higher rates”.
According to the executive, the current renovation rate in the buildings of the company in the New York area is around 60%, five percentage points less than at the beginning of the year.
The drop comes after renters who got deep discounts during the pandemic are faced with the dilemma of paying more to renew contracts or looking for a cheaper place in the midst of a competitive market.
Data from Douglas Elliman Real Estate, note that in Manhattan, the first-quarter vacancy rate was below 2% and rents were up as much as 25% since the beginning of 2021.
While Equity Residential in New York reports that the leases that were renewed in the quarter, the rent increase was 21%, compared to 14.5% in the fourth quarter of 2021.
According to information, the increases were even higher for new agreements, with an increase of 29.7% in the region that includes company properties in Manhattan, Brooklyn and New Jersey.
New York was the strongest market for the Fid real estate investment trust (REIT), which also operates in areas including Southern California, San Francisco and Boston, where increases for new leases and renewals were just 10 years.
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