Metros Seeing the Largest Differences in New-Lease and Renewal Trade-Out

More than half of all U.S. apartment leases that expired in 1st quarter 2017 were renewed – often with an increase in the monthly rent. In many metros, renewal leases included larger rent increases than a new lease for the same unit would have. In other metros, the opposite is true. Using lease-transaction data, RealPage has identified markets having the greatest differences in new-lease and renewal trade-out in 1st quarter 2017.

New-lease trade-out refers to the difference in rent a new occupant of a unit is paying, compared to the rent the unit’s previous occupant was paying. Renewal trade-out refers to the increase or decrease in monthly rent in a renewed lease compared to the previous lease.

The following table shows the metros having the greatest differences between new-lease trade-out and renewal trade-out in 1st quarter 2017. The difference was determined by taking the renewal rate change and subtracting the new-lease trade-out.

Among the RealPage top 50 U.S. markets, the following were found to have the largest differences between new-lease and renewal trade-out.

New York’s difference of 730 basis points (bps) between new-lease and renewal trade-out was the highest among all major markets nationally. San Jose closely follows with a 720 basis point difference. The gap widens between the second and third spots, as Baltimore exhibits a difference of 620 basis points. Houston and Pittsburgh round out the top five, with each market registering a 540 basis point difference.

Each metro in the top five recorded negative new-lease trade-out in 1st quarter 2017, so positive renewal rent change in those metros created large differences. The top two – New York and San Jose – posted strong renewal trade-out, which helps create such a vast difference between the two statistics.

Alternatively, several metros posted new-lease trade-out higher than renewal trade-out. The top five are listed below.

Unlike the metros with the largest differences in renewal and new-lease trade-out, metros with significantly higher new-lease trade-out tend to see strong rent change across both metrics. In addition, the difference between new-lease trade-out and renewal trade-out is significantly smaller than in the first table.