It’s important to assess vacant units carefully, Harrelson adds. You may find that you just have a few problematic floor plans that require concessions. Or a new marketing strategy might eliminate the need for a freebie. For example, instead of labeling a unit as a two-bedroom, call it a one-bedroom with a den. “It’s all in how you present it,” Harrelson says.
Equity Residential takes a different approach. “We try to move as much of the concession play to the upfront side so as recovery comes, we have a better opportu-nity to gain rent increase on the back end,” says Spector. However, many customers choose to have concessions spread over the term of their lease rather than upfront because they’re more concerned with their monthly budget, Spector adds.
The good news: Concessions will finally start to ease in 2004, executives predict. “We expect fundamentals to be roughly in balance,” says AvalonBay’s Naughton. “It’s largely expected to be a stabilizing year, which I think will result in concessions easing as we move through the year.”
But the market still has far to go. In the meantime, effective management strategies will not only attract new renters but, just as important, increase retention. “So many of us have lost people to buying homes that if there is any other reason people are moving, we are trying to mitigate that and close the back door as much as possible,” says Rondetta Troutman, senior vice president of conventional housing for No. 24-ranked Picerne Real Estate Group, based in Warwick, R.I. “It costs so much money to bring in a new renter upfront. Everybody recognizes it’s a lot smarter business move to keep the people you’ve got.”
–Additional reporting conducted by Miriam Lupkin, Editor.