The Classic Prime Multifamily Leasing Season Is No More

When looking at pre- and post-pandemic in the framework of commercial real estate, there’s a sense that things have changed. Office is an obvious case. Work from home, the ability to get talent anywhere, and move-to-quality have conspired to shake up that market.

But it’s not the only change, where longer-term trends have really taken hold. Demographic shifts have changed where to seek various hot markets. Medical outpatient buildings are changing how traditional medical office and hospital have worked. And now, according to RealPage, multifamily prime leasing season has taken a hit.

Seasonality isn’t completely gone, but the period when multifamily owners and operators could count on burning down the vacancy rate isn’t doing what it once did.

“Historically, a preponderance of 12-month leases turned in the summer months and most renters approximately followed an academic calendar,” RealPage wrote. “Generally, those themes still ring true, but the pandemic’s impact on professionals’ ability to work from anywhere has disrupted this seasonality.”

The firm looked back as far as 2000 and found an alteration. From April to September, roughly Q2 and Q3, multifamily operations could count on seeing the majority of annual demand. That was after unpleasant winter weather and before the back-to-the-grind period of fall. The period is still there, only not as significant.

“From 2000 to 2013, absorption during prime leasing season easily carried the calendar year for annual demand,” RealPage wrote. “In the most intense years from 2006 to 2009, which corresponds to the Great Recession, 2nd and 3rd quarters accounted for the only absorption of the calendar year, while 1st and 4th quarters recorded deep net move-outs. Due to that deep dichotomy during those years, prime leasing season demand ran as high as 5,000% higher than annual demand. Also, throughout this time period, it was far more common that 1st and 4th quarters recorded net move-outs, making any demand during prime leasing season seem severe by comparison.”

According to RealPage’s analysis, between 2000 and 2013, average prime lending during the middle two quarters was 754.9% of annual demand. The low was 32.6% and the high, 5,104%.

From 2014 through 2023, though, average was 121.0%, The low was 64.1%, and the high, 121.0%.

“Over the last decade, 1st quarter demand continued to account for a relatively small share of annual demand, averaging just 12% of annual demand (if negating the extreme outlier year of 2022),” they wrote. “If assuming that 2024’s 1st quarter demand should account for approximately 12% of annual demand, that translates to another 760,000 units to be absorbed in the remaining three quarters of 2024. That seems a tall order as concurrent apartment supply from 2nd, 3rd and 4th quarters should total about 530,000 units.”