The rental market is constantly evolving, and after years of massive rent increases, 2024 is bringing a significant shift to the Philadelphia market. If you have a lease renewal approaching, it is critical to understand the new market dynamics to keep your property profitable.

Watch our full 2024 Lease Renewals & Rental Market Update below, or read on for the key takeaways and our recommended strategies for property owners.

The Market Shift: Slower Demand and Flattening Rents

Over the past 7 to 8 years, landlords grew accustomed to increasing rents by 8% to 10% every single year. However, we have officially entered a new market cycle. Across the country, rental demand is slowing down significantly. Recent data indicates that 60 out of the 100 largest US metro areas are actually experiencing negative rent growth year-over-year.

Our Strategy for 2024: The 80% Retention Goal

With longer vacancy times and increased turnover costs becoming more common, our primary goal for 2024 at TrustArt Realty is tenant retention.

We have set a target to renew at least 80% of our current leases. Keeping a reliable, paying tenant in your property is far more profitable than letting them leave to try and chase a slightly higher rent amount that the current market will no longer support.

What to Expect for Your Upcoming Renewals

Because of the cooling market, our approach to lease renewals this year will look different:

  1. Smaller Rent Increases: You will likely not see the large 8-10% jumps of the past. In many cases, we will issue small increases, and in some situations, rents may need to remain completely flat to keep a good tenant in place.
  2. Prioritizing Stability: We are not concerned with aggressively "catching up" to the top of the market this year; we are focused on preventing costly vacancies and eliminating turnover costs.
  3. 90-Day Notice Requirement: If for any reason you do not want to renew a tenant's lease (e.g., you are selling the property or planning a major renovation), you must let us know at least 90 days before the lease term ends so we can legally issue the non-renewal notice.

Want a property management team that proactively monitors the market and prioritizes your bottom line? Contact TrustArt Realty today to learn more about our services!