Changing the Way Multifamily Thinks About Apartment Market Research with Lease Transaction Data

During any period of change in a multifamily housing cycle, a sound investment strategy must be based on what the market truly bears—not what peripheral data may suggest. Performance rarely stays steady, which is why many in the apartment industry are turning to lease transaction data for greater insight into market performance. Lease transaction data has become a key influencer for developers and investors looking to build new properties, create value-adds or rehabilitate older assets. A big reason is that traditional market surveys based on asking rents and occupancy do not provide complete insight into a market or submarket’s true performance. Factors like average vacant days, lease terms, renter incomes, retention rates, renewal rent growth and others are guiding investments and operational strategies no matter the economic climate. “Lease transaction data offers a massive advantage,” says RealPage® Industry Principal Andrew Bowen. “First, it is accurate and you’re seeing the actual source of transactions within a market. Second—and this one is the bigger reason.” Typically, a market may put a value on asking rents and concessions and occupancy, but that’s not enough, he adds. The actual behaviors of buyers, residents and competition must be taken into consideration to fully understand market performance, and that can only be identified by lease transaction data. Achieving better accuracy of market performance Lease transaction data is changing the way people are thinking about market research tools, Bowen says. Traditional market research platforms typically offer only the perception of how a market is performing through survey data. While asking rents and occupancy are important to understanding  market conditions, a number of other variables must also be considered. Rent roll, revenue, new lease rent growth, retention rates, average vacant days and renter incomes are some of the key metric...