Four Implications of Loss-To-Lease Dropping Below Long-Term Average

Jay Parsons, RealPage Analytics points out a critical indicator that renewal lease rents will cool off significantly in coming months and lead to a) more favorable deals for renters, b) more renter turnover, and c) challenges for value-add investors dependent on large rent trade-outs. He notes that “renewals are a lagging indicator often priced 60-120 days in advance, and loss-to-lease tends to be the leading indicator.” He discusses four possible implications:

1. Renewal offer letters will be priced more conservatively.
2. Renter turnover with accelerate.
3. Operators will prioritize occupancy and retention.
4. Some value-add deals could see challenges

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