Shafiq Hirani CCIM shares three strategies for property owners: ignore national vacancy rates and track your sub-market instead, prioritize keeping existing tenants since new buildings are offering heavy concessions, and expect relief soon as new construction starts hit historic lows and deliveries are down 14% year-over-year.
What do you actually do with this? 3 things. First, stop benchmarking yourself against national headlines. If you are hearing that vacancy is improving and your building is not seeing it, the data says you are not the problem. Stabilized properties across the entire country are experiencing the same thing. Know your submarket and your comparable properties, not the national average. Second, retention just became more valuable than it was 6 months ago. When new buildings are pulling renters with concessions, every tenant you keep is a tenant you do not have to replace in a competitive leasing environment. Turn costs and downtime hurt more when the leasing market is this competitive. Combine that with the weak jobs report from last Friday, and retention should be your top operational priority this fall. Third, and this is the encouraging part, the pressure is temporary. CBRE reported deliveries down 14% year over year. New construction starts have collapsed to their lowest level since 2011. Once this last wave of new buildings finishes leasing up, the concession pressure fades and established buildings get their pricing power back. You are absorbing the tail end of the supply wave right now.
