Over the course of Q2 2016, multifamily REIT AvalonBay Communities offered $300k of concessions, a fourfold jump from the same point last year, due to increased competition and poor economic performance.
COO Sean Breslin (left) said the concessions, mainly coming in the form of months of free rent, were focused in NYC, New England and Northern California on a Tuesday earnings call.
With increased competition from new supply across the country and weaker job growth (thus lower demand) in the markets where they own rental units, AvalonBay was forced to cut its revenue growth forecast by 0.4%, Crain’s reports.
“We did not see the same seasonal lift we’ve seen in prior years,” said CEO Timothy Naughton (right).
In San Francisco, for example, more than 5,100 new units are expected to hit the market in 2016, the most in 26 years. Manhattan has an even higher number, with 5,675 mostly high-end rentals expected to come online by year’s end.
On the conference call, Sean said there weren’t enough high-paying jobs to keep up with the supply, and thus rent growth in the NYC market has been “stubbornly low.” [Crain's]
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