Rental Markets Cause Building Owners to Make a Choice
Should building owners risk making concessions? Rental markets are bringing back the concessions. Building owners have to decide what to do to make enough money to support their investment. Some offer the new tenants free rent for a month, or no increase on rent for existing tenants. New developments for multifamily living also have to increase concessions in order to get more renters in the building.
Most millennials prefer renting over home ownership causing apartment development and concessions to rise in demand. Even with the new developments, building owners still see high vacancies. The rental market may be high but the rent growth for the owners could be lower than they anticipated.
While concessions seem to be a must have to continue the growth in the rental markets, this can put some building owners at risk. Owners in some cases don’t weigh out the cost in those concessions, making rent they offer to get the new tenants, putting them in a bind. You can read more about here.
Building owners also have to decide after making concessions can they handle a possible recession. Some believe when a recession hits the rental market will go down. However this could bring in more tenants from previous homeowners in a tough financial situation. Concessions in this case may not be the best option. Either way building owners must be prepared to make a choice to gain rental growth.