RentHop: Look for rent discounts in off-peak months
If you lease an apartment in the off-season you are more likely to get a deal than at peak rental time, roughly February to June.
If you lease an apartment in the off-season you are more likely to get a deal than at peak rental time, roughly February to June.
So says RentHop, the apartment search engine. Its data shows Philadelphia has off-season rent deals for one-bedroom apartments nearly 2 percent lower in January and July and closer to 3 percent in November and December.
"These are median asking rents," said Lawrence Zhou, data scientist at RentHop. "The basis for the study was to show how seasonality affects prevailing asking prices landlords are charging."
Property managers, developers and realtors acknowledge there is an off-season for rentals that fits RentHop's parameters.
"Typically, rentals slow down in late October and pick up in mid-February" to May 31, said Benjamin Oller, a managing partner of The Condo Shop and RentPhilly.com in Center City.
"Once the Jersey Shore opens up and I-76 is empty, no one is renting or buying," Oller said.
Yet, the city rental-market behavior is not all that typical at the moment, said Chris Somers, broker/owner of Re/Max Access in Northern Liberties.
"The market is hot year-round right now, so demand is constant, especially in the growth neighborhoods," he said.
Marcus & Millichap, which provides real estate research information, said the average rent in the region will increase 3.1 percent, to $1,221 a month this year. The current vacancy rate is 4.6 percent, higher than 2015 because of 5,400 mostly market-rate rentals coming online this year.
During the off-season months, inventory is limited, said Marianne Harris, sales and marketing director for Dranoff Properties, but leasing, while slower, is not dormant.
"I have never heard of tenants saving money if they sign a lease in the off-season," she said.
"What we see more often in markets of low demand or off-season rental strategies," said Mickey Pascarella of Keller Williams Real Estate "is a half-month or full month for free, or a low-deposit requirement."
Discounting the monthly rent directly affects the building's market value, he said. In contrast, an upfront discount can be chalked up to "marketing," which is not as damaging in terms of the building's market value, Pascarella said.
Deals depend on whether the apartment building is in the "lease-up" or "stabilization" phase, said John Westrum of Westrum Development Co. in Fort Washington.
"In lease-up phase, we do what we can to get leases during the slow months with various incentives as it is important to get the buildings leased as quickly as possible," he said.
"Even if we give an incentive on the signing of the lease, we try to time terminations to come in the spring and summer," he said, "so we may give a discount in exchange for a 15-month lease versus a 12-month lease."
Once a building is stabilized, Westrum tries not have leases terminate during the slower months.
"When it does happen, we work in a similar fashion," he said.
The theory on multifamily rentals is to keep them filled and find the equilibrium between price and pace of lease-up to maximize net operating income, he said.
RentHop urges renters to sign 18-month leases so that their next apartment search will be in off-season months, but landlords typically want the lease to end in peak rental months.
Most leases signed in the winter "are brought to June or July for expiration," said Allan Domb of Allan Domb Real Estate in Center City, who has a large portfolio of condominium rentals.
Depending on the time of the year, most landlords do what is called "lease management," whereby the lease ends at an optimal time-frame to re-rent the unit, Harris said.
"At RentPhilly.com, we do over a thousand rentals a year," said Oller, and "we time the market from spring to spring."
"Landlords typically don't want to be locked in, in case circumstances change," he said.
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