Renewal rates change over life of a project
1st Year renewals
The business school answer would be = 'It Depends', there are many factors that affect retention rate but one things tends to be a commonality, your 1st year renewal rate will be lower than the years after that. I've seen communities with high first year renewal rates, especially when there is some sort of government related housing incentive that covers a portion of a tenants rent.
What to expect after year 1
After the first year of renewals you can expect renewal rates to move up to the 70% to 85% in standard luxury apartment communities. If you're under that 70% number then it is likely due to one of the factors below....
- Pricing is not competitive - Reconsider pricing
- Demographic changes in area - Do a market survey
- Unhappy residents - Check your reviews
What you can do to reduce the renewal wave
The main decision you can make during the Pre-leasing phase and the Lease-up phase is to stagger lease end dates. A good strategy is to create a graph based on expected future renewals needed. Understand that more people like to move during the warmer months and chart out a best case scenario for when you would expect leases to come in. Once you have a workable leasing scenario setup you can stagger leases so that the lease ends times (1 minus the retention rate) for each month can be managed and replaced.