Retention is falling
Many of you may have seen a recent blog by Greg Willet, RealPage, Inc.’s Chief Economist, titled Apartment Retention Gets Messy. It’s a great piece on what we’ve seen happen with retention over the last several years.
To summarize, for over a decade prior to 2019, retention rates hovered at 49%. In 2019 and into the first couple of months of 2020, the industry saw an all-time high of 53%; then the pandemic hit, and this number soared to 58.5% in April of 2020 as residents chose to stay put.
Fast forward to December 2021, and retention has fallen to 51% in most markets, with large gateway markets falling to less than 40% as renters shop around. In essence, we’re back to pre-pandemic norms. There are, of course, nuances between urban and suburban areas as well as product class; be sure to read the RealPage article to dive into those numbers, some of which are quite significant.
Welcoming more pets as a demand generator
So, what can rental housing operators do to hang on to those higher retention numbers?
Part of the answer lies in creating demand for your unique product offerings, and that’s where pets come into the picture. Most apartment operators already accept pets and consider themselves a ‘pet-friendly’ option for renters; however, would it surprise you to know that most renters say it’s hard to find pet-friendly housing? According to the 2021 Pet-Inclusive Housing Report, 72% of renters to be exact; and this is largely due to size and breed restrictions inherent in the vast majority of pet policies.
To put that into perspective, of the top 10 dog breeds in the U.S., six would not be welcome in most apartment communities due to breed and/or weight restrictions – and this includes the most popular dogs, Retrievers (Labrador and Golden). When you also consider that nearly 68% of U.S. households have a pet, the number of potential renters becomes significant.
It follows that easing or removing breed and weight restrictions, therefore becoming more pet inclusive, translates to instant demand generation. Creating a marketing program that drives awareness will attract pet-owners, and voilà! You suddenly have a distinct competitive advantage.
Happy pet owners mean increased retention
Creating demand by becoming more pet-inclusive is only the beginning. Once those prospects have become renters, they are likely to stay longer – 21% longer, according to the afore-mentioned Pet-Inclusive Housing Report.
Rental housing operators are seeing this in action, sometimes with eye-popping results. Take The Management Group (TMG) based in Atlanta, Georgia. Three years ago, TMG made the decision to remove all breed and size restrictions in order to achieve greater visibility into their entire pet population. They now have a pet-owner renewal rate of 80% -- and 70% of their units now include a pet, up from 40% when restrictions were in place.
According to Jamin Harkness, partner and executive vice president of TMG, “At a property with 250 units, that means 175 of those units house a pet. It also means that, at an 80% vs. 50% renewal rate, we are seeing a minimum of 52.5 more units per year renewing. If I multiply that by our average vacancy loss of $1,200, and average turn cost of $1,800, that’s over $160,000 more NOI than we were achieving previously.”
It makes sense. When renters finally find the apartment home that welcomes their furry family members, they stay. Probably longer than ever now, given the skyrocketing cost of becoming a homeowner in today’s economy.
As K. David Meit, CPM®, principal of Oculus Realty said, “Pet owners are the best. They are loyal renters who engage with each other and make our communities better.” Oculus Realty also lifted all breed and weight restrictions over the last several years. “Our decision to eliminate restrictions has created joy and given us a distinct competitive advantage.”
If you're thinking about becoming a pet inclusive community, visit https://www.foundanimals.org/pets-and-housing/ for free resources on how to get there.