Lease Renewals Rise in Most Major Markets

As reported by GlobeSt.com, renewal rates for U.S. apartment leases have reached a historic high, with more than 54% of renters choosing to stay in their units, according to a RealPage study. This marks a 1.2% increase YOY and reflects a broader long-term growth trend in lease renewals.

Before the pandemic, the national renewal rate averaged 50.7%. The rate climbed to 52.8% in early 2020 and peaked at 57% during mid-2022 when COVID-19 lockdowns limited relocation options.

Regional Highlights

Nearly all the top 50 US apartment markets saw renewal rates rise over the past year. Notable standouts include:

• Minneapolis and Detroit: Both markets saw renewal rates climb over 400 bps.
• Seattle, San Francisco, Las Vegas, and Richmond: These cities experienced increases exceeding 300 bps.

However, two major markets bucked the trend:

• San Diego and Austin: Both cities saw renewal rates decline meaningfully in October 2024, likely due to high levels of new apartment supply.

Why Retention Matters

With record-setting apartment construction leading to higher supply levels, operators are focusing on tenant retention to maintain occupancy rates. RealPage noted that keeping current residents ensures all newly signed leases directly boost net absorption, an essential metric for maintaining financial performance in a competitive market.

Outlook

The long-term increase in apartment renewals reflects shifting renter preferences and market conditions. While high-supply cities may continue to see lower retention rates, the nationwide trend of climbing renewals underscores the importance of tenant retention strategies in today’s housing market.