CITYVIEW SAYS RENTS ARE STABLE, CONCESSIONS ARE UP
Apartment owner and developer Cityview has managed to find its footing amid the market dislocation. So far, rent collections and leasing activity has been healthy, and the firm has yet to drop rental rates for both renewals or new move-in leases. However, the company has increased up-front concessions to help drive new leasing activity.
“Last week we had our biggest leasing week of the year,” Sean Burton, CEO of Cityview, tells GlobeSt.com about the firm’s recent leasing activity. “Generally, January and February are slow, so you don’t want to read too much into that, but it is nice to be at levels that are the highest for the calendar year. That is not something that we expected. We are cautiously optimistic that things are moving in the right direction.”
As noted above, Cityview hasn’t decreased rents in any of its properties but has made the strategic decision to increase concessions by a few weeks in certain markets to drive new leasing activity. “We have done that to encourage people to make a decision now, rather than waiting,” says Burton. The firm has also asked new residents to sign 14- or 16-month leases. Hopefully, in 14 to 16 months we are in a recovery period, but if not, the extended lease terms will stagger expirations.
Rents for lease renewals have also remained flat—a conscious decision made by Cityview. “For existing residents, we have not reduced rates, but we haven’t increased them either,” says Burton. “We decided across the portfolio that we would keep rates flat for people that wanted to renew, knowing that a lot of people are going through stress and uncertainty and we didn’t want to add to that.”
As for current rent collections. Cityview’s stats outperform the market. The firm closed April with 99% in rent collections and May with 96% in rent collections. So far, June is performing even better. In the first week of the month, Cityview had 83% of the total rents collected, compared to 80% during the first week in May. “June is looking stronger and has rebounded more to pre-COVID levels,” says Burton.
Rather than low rent collections, Cityview is more commonly seeing late payments for residents that are experiencing hardship. “The people that haven’t been that affected are paying at the same clip or even faster than they have in the past,” says Burton. “Then you get people that are having more challenges, and those people are paying later. So, we are getting more money straggling in later in the month than usual. And, you have a third group of people that have deferral plans or partial payment plans. That money is coming in later as well. Our goal is to get as much in by the end of the month as possible before everything resets.”