Multifamily Apartment Turnover Rates Continue to Fall

A recent report by CBRE reveals that the turnover rate for multifamily housing has dropped to 47.5%, the lowest level in two decades. Data from RealPage shows a decline of 80 basis points, supported by evidence from six major real estate investment trusts (REITs):

• Major REITs Reporting Lower Turnover Rates:
  • AvalonBay, Camden, Equity Residential (EQR), MAA, and UDR reported a lower turnover rate in Q1 2019 compared to 2018, with an annual average drop of 2% to 42%.
  • Essex saw a slight increase of 1 point to 41%.

This decrease in turnover is part of a broader trend since 2000, when the rate was 65%. CBRE notes that lower turnover rates are usually seen as a positive sign for the industry, indicating strong market conditions. Although turnover rates increased slightly in the mid-2000s, they fell again during the Great Recession.

According to CBRE, the National Apartment Association estimates that turnover costs are at least $1,000 per unit and can exceed 3,000. Despite this, owners often achieve higher rent growth when units turn over. Seasonal effects also influence turnover rates:

• Seasonal Effects on Turnover Rates:
  • Lower rates in the fall and winter.
  • Higher rates in the second and third quarters of the year.

Geography affects turnover rates as well. The Northeast and Midwest typically have the lowest rates, with EQR and UDR reporting that New York City and Washington, D.C., had the lowest turnover rates for Q1 2019. In contrast, RealPage reports that the South and West regions had the highest rates.

• Geographic Variation in Turnover Rates:
  • Lowest Turnover Rates (Q1 2019):
    • Northeast and Midwest regions.
    • New York City and Washington, D.C.
  • Highest Turnover Rates (Q1 2019):
    • South and West regions.

RealPage’s analysis of 50 metros found varying turnover rates:

• Metro Area Turnover Rates (2018):
  • Lowest Turnover Rates:
    • Milwaukee and Northern New Jersey: 38.1%
    • Providence: 38.7%
    • Miami: 39.4%
    • St. Louis: 40.5%
    • Philadelphia: 41.1%
    • Cleveland: 41.2%
    • New York: 41.4%
    • Minneapolis: 42.8%
  • Highest Turnover Rates:
    • Salt Lake City: 53.7%
    • San Antonio: 53.6%
    • Other high turnover metros: San Diego, Charlotte, Phoenix

CBRE also provides anecdotal evidence that property class and age affect turnover rates. Class B and C communities usually have lower turnover rates than newer buildings. Additionally, smaller properties tend to have less turnover than larger ones, as property managers focus more on maintaining occupancy rather than maximizing rental income.

• Effects of Property Class and Age:
  • Class B and C communities typically have lower turnover rates compared to newer buildings.
  • Smaller properties have less turnover than larger ones due to a focus on maintaining occupancy.

How can we continue this trend?

Support prospects and residents, and make them feel valued and part of the community. Here are a few ideas:

Serving Angry Residents - keeping the peace and solving issues quickly and effectively goes a long way when residents are considering their future plans.

Live Chat Support can Improve Communication and Resident Satisfaction.

Deeper insights into the experience of your residents can be invaluable.

There are of course many economic factors at play when housing trends are being analyzed, but covering the basics of customer support and communication will have a great positive impact on resident satisfaction levels, and ultimately turnover rates.