AvalonBay’s Rent Concessions Jump in New York, San Franciscoby
Landlord contending with increased supply, sluggish job growth
Rent growth on new NYC leases ‘stubbornly low,’ Breslin says
Apartment landlord AvalonBay Communities Inc. gave renters concessions worth $300,000 in the second quarter, four times more than in the same period a year earlier, as enticements to sign leases.
The sweeteners, in the form of free months of rent, were greatest in New York, Northern California and New England, Chief Operating Officer Sean Breslin said on a call Tuesday to discuss earnings.
AvalonBay cut the midpoint of its full-year forecast for revenue growth at communities open at least 12 months by 0.4 percentage points as the landlord contends with competition from a surge of newly built apartment units across the country. Job growth in the markets where AvalonBay owns apartments was also weaker than the company expected in the second quarter, damping demand for rentals in what is usually the busiest leasing period, Breslin said.
“We did not see the same seasonal lift we’ve seen in prior years,” Chief Executive Officer Timothy Naughton said on the call.
In San Francisco, about 5,100 new units, the most in 26 years, are expected to be listed for rent in 2016, data from research firm Reis Inc. show. In Manhattan, 5,675 apartments will be added to the rental inventory, most of it high-end, according to brokerage Citi Habitats.
Rent growth on new leases in New York has been “stubbornly low,” Breslin said. “There’s just not enough high-paying jobs being created to absorb all the new supply.”
Shares of AvalonBay fell 1.7 percent to $181.94 at 3:21 p.m. New York time. They’ve climbed 7.5 percent in the past 12 months.