Future Exposure and Occupancy Drive Rent Pricing Decisions via Multifamily Executive Magazine

In its first-quarter 2012 conference call, Chicago-based Equity Residential told analysts and investors that turnover was up in its properties—almost 100 basis points versus the first quarter of 2011, coming in at 94.9 percent (the same as the first quarter of 2011). A few years ago, that figure would have set off alarms. This year? Not so much.

“The occupancy in our key markets actually declined throughout the quarter as we held on to our higher rates,” said EQR president of property management Fred Tuomi in a transcript provided by seekingalpha.com. “And we believe that making a trade right now in our strong markets, trading some occupancy or holding those higher rates is actually a good strategy at this point in the cycle. Now, as we enter the leasing season, we fully expect and are beginning to see a recapture of that occupancy at those higher rates that we held onto as we enter the leasing season.”

EQR’s dialogue on its conference call raises an interesting question—how much occupancy should an apartment owner let bleed out in an effort to raise rents? With rents continuing to move up, it’s something every apartment owner and manager deals with.

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