Renewal rates are enjoying a 10-year high, so say goodbye to concessions! Property managers can breathe a collective sigh of relief and expect to optimize rates on whatever inventory remains after renters re-up. But speaking of inventory, there has been an awful lot of development in metro areas across the country. And interest rates are always an X-factor. So what if a resident is on the fence or finds a better deal? What if a combination of new-school renters, ubiquity of information and market uncertainty makes renewals less than a sure thing? What can you do to close the deal and get the renewal?

Trending, not truth

The problem with any trending data, especially in real estate, is that it’s a lagging indicator of the present and completely unreliable as a crystal ball. This isn’t a forecast for thunder showers on the sunny renewal climate, but it’s always good to carry an umbrella when even Manhattan property managers are experiencing softening demand from greater inventory. The Wall Street Journal reported in early April that incentives are not only still in play, but at their highest level in five years. They cited the example of NYC brokerage Citi Habitats, which disclosed that “21% of its rental deals in the first quarter included some form of incentive, typically owner-paid brokerage fees or one or more months of free rent or both. … In February, one out of four leases signed included a concession.”

This is not the case in Denver, where renter appetites are seemingly insatiable. According to The Denver Post, “Metro Denver tenants snapped up an additional 4,550 apartments in the second quarter, but the robust new supply wasn't enough to keep rents from rising and vacancy rates from falling, according to the Denver Metro Area Apartment Vacancy & Rent Report.”

So it’s feast! Or it’s famine! Or it’s some sort of paleo diet in which fat doesn’t make us fat, but carbohydrates are to be avoided at all costs. The point is, the positive trend of higher renewal rates doesn’t buy as much long-term security as you’d hope. And as you know all too well, there are a lot of factors in play besides supply and demand.

Take the renewal challenge

Not unlike the wireless communications industry, multifamily property management often comes under fire for providing incentives for new customers while neglecting to offer retention rewards aimed at long-term, loyal customers. While it’s tempting to create engagement opportunities for new renters, feedback from residents cannot be ignored.

What are you doing to make renewal a win/win proposition? What added value are you giving a renewing resident? Why should they consider passing up tempting incentives from another property looking to decrease vacancy rates? Yes, you need to fill units, so attracting new residents is always going to be a motivating consideration, but it becomes a bit too easy to assume a “once occupied, always occupied” demeanor that makes renewals anything but fait accompli.

Time for alignment?

Anyone getting a new set of tires, or bringing in a dearly used vehicle for service, is familiar with the notion of alignment. Tires only slightly off-kilter quickly lose tread and create additional problems the driver won’t find out about until it’s quite costly. It’s an apt metaphor for property management with regard to what you offer and what residents truly desire. How can you improve alignment in this area? Here are three ideas synthesized from renter feedback:

1. Offer flexibility with lease terms

“Consider changing the policy regarding breaking leases. Perhaps less of a penalty could be given when the lease is terminated closer to the end of the agreement.”

This feedback, from an anonymous survey of renters, is worth a second look. While it might seem counterintuitive to offer leniency around breaking leases, the severity of some penalties could act as a hidden disincentive to renew if it suggests to residents that property managers don’t care about their individual circumstances. Occupancy has long benefited from the notion of pro-rating, so why not consider something similar when it comes to breaking a lease? The knowledge that a lease broken closer to the lease date carries fewer penalties may be what’s needed to reassure renters who are already dealing with uncertainty in their logistically complicated lives. If they have the option to get out of a new lease early without major repercussions, they are more likely to feel comfortable renewing.

2. Know what matters most to residents

The comedian Steven Wright had a bit about how he’d drive around on a Friday night and find hidden gem parking spots — where he’d loiter, just for the feeling of power and control it conferred. Residents near and far who’ve heard this sketch have likely laughed out loud — it’s funny because it’s true. Parking never seems to get easier, and it’s often top of mind for renters. In fact, a recent National Multifamily Housing Council survey found that 94 percent of renters consider parking to be a priority when searching for an apartment. If there’s space allocated for parking at your community, make sure the policy and waiting period are clear and fair. Also, consider making third-party parking arrangements and offering them as a value-add to residents as a convenience — and an incentive to stay.

Survey your residents regularly to determine what other features or amenities they value; don’t wait until they opt out of a renewal to ask why they’ve chosen another apartment.

3. Evaluate your reward systems: New vs. tried-and-true

How many of you have heard the complaint from renters that there’s no benefit to renewing or that renewing just means agreeing to another rate increase? Perhaps too often a resident who’s re-upped multiple times begins to feel “loyalty fatigue”— the “what have you done for me lately?” syndrome. Are there ways to offset rent increases as a function of longevity? Are there resident improvement funds or other perks aimed at rewarding the faithful? Are your incentives aligned with a mix of multigenerational residents for whom the idea of value carries significantly different meanings?

As ever, no silver bullets, quick fixes or newly discovered wisdom of the ages is at work here. You are the expert, and you’ve got your own instincts honed by experience, plus ear-to-the-ground ideas to put into play. Hopefully you’re experiencing some significant benefits from the uptick in renewals, using creativity to secure more difficult re-ups and proceeding with cautious optimism toward your future goals. Make hay while the sun shines — just make sure that barn space gets renewed when the time comes.