It seems like everywhere you look in Philly right now, there are new buildings popping up, and old ones undergoing renovations. With all of this construction comes thousands of new rental units flooding the market, and not enough tenants to fill them. Two years ago, renters had to have their checkbooks ready to put a deposit on an apartment on the spot or risk losing it, and leasing incentives were nearly non-existent. Fast-forward to now, renters have time, choices, and the ability to be picky with where they choose to live – great for them, not so great for property owners.
(Read/Listen to WHYY discuss this topic: In renters’ market, Philly landlords cut prices and offer enticements to woo tenants)
However, even with the current oversupply of rental units, the JG Real Estate team remains optimistic about the overall health of the Philadelphia rental market. We see the current slow down as a temporary oversupply with consistent and increasing demand which will level out in the next few years.
Our leasing team lends their expertise for leasing incentives property owners can utilize to attract tenants.
1. Offer the rest of the month free if tenants move-in this month.
If you’ve moved even once from one rental to another, you’ve most likely paid pro-rated rent to cover moving into your new place a few days before the first of the month. Offering the rest of the current month free to new tenants is a great way to allow them to take time to move in, and move out of their old place without the financial burden of doubling up on rent.
2. Lower the monthly rent for a shorter lease term (or a longer lease term) to bring the leasing cycle back into peak rental seasons of spring/summer.
Mid-fall through winter are not peak times to move and when tenants terminate a lease at these times, it can sometimes take weeks, even months to get a new tenant moved in. If your property becomes available during these times, being flexible with rent and/or lease lengths can help get tenants in sooner than later, and can simultaneously help you get your property back on the peak leasing schedule.
3. Don’t require the last month’s rent to be prepaid, easing initial move in costs.
If it comes down to a decision between an apartment that requires the equivalent of three month’s rent up front vs. two month’s rent, we’d bet that tenants choose the two month option.
4. Offer a move-in credit to apply towards a monthly rent discount.
A one month credit spread out through the year, or even a half month credit, could equal a monthly discount of $40-100. This leasing incentive is incredibly appealing when a $1600 property suddenly becomes $1500, and so on.
5. Offer a credit toward move in costs in a lump sum up front, in lieu of the more common credit that pro-rates over several months.
Let’s face it, moving is expensive. Unless this is a tenant’s first apartment, they are most likely paying the rent of their current apartment, while also having to pay a security deposit and first/last month’s rent at a new property. With rent averaging $1900 a month in Philadelphia, that quickly adds up. Easing the pain of a tenant having to write a hefty check, before getting their security deposit back on their old property could be the perfect incentive to get a tenant into your empty apartment sooner than later.
“Move-in credits as leasing incentives require property owners to give a little, but can pay off in the long run. – Charles Mertz, Leasing Manager”
6. Offer a credit towards hiring professional movers, especially for units that are walk ups with no elevator.
Older buildings offer lots of character and style, but they also come with the burden of stairs and narrow hallways that make moving in difficult. Eliminate that burden for potential tenants by offering a credit up front for hiring movers that tenants may otherwise not be able to afford.
7. Pre-pay off street parking for units in high-density neighborhoods.
In some Philly neighborhoods, parking is nearly impossible. If you suspect this is what’s holding tenants back from choosing your property, you can do something about it. It might not be the norm, but depending on how long your property has been vacant, a move such as this one could make all the difference.
8. Gift card incentives.
This is self explanatory, and also simple. If potential tenants are back and forth between a few different properties, the deciding factor could be going with the one that comes with a gift card to help with groceries, household items, or whatever they choose.
9. Agent bonus for securing tenants by a certain deadline.
This is an incentive for the agents working to rent your property, not the tenants. Commission for rentals isn’t very high, but with an extra bonus available, agents may feel more pressure to find a tenant an secure a lease – especially at this time of year when the entire real estate market is slowing down.
10. Offer a longer-term lease with no rent increase after 12 months.
No property owner wants to turn over a lease every year. If you can secure a long term tenant and not have to worry about turnover – which comes with the potential for a few months with no rental income, choose the long term tenant. You may not get an increase in rent, but you will get 2-3 years of consistent income.
Are you a potential tenant looking for a property? All existing leasing incentives are noted on individual property listings on our Find a Property page.