Apartment tenants with pending renewals are beginning to opting for short-term or month-to-month leases rather than long-term leases, according to the latest survey from the National Apartment Association, which found that nearly 35% of landlords said that some portion of tenants renewing leases signing short-term lease structures. The previous monthly report—this latest survey was conducted from July 20 through July 24—did not address short-term lease structure, however, the data notes that tenants' preference for short-term leases has been increasing since March.

Tenant preferences are clearly changing, and the trend toward short-term lease terms could only be the beginning. Apartment owners are beginning to lose confidence in the market, the survey also found, a development that is appears to be accelerating. In the most recent survey, 23% of multifamily owners and operators anticipate that it will take one-to-two years for operating metrics to recover and return to pre-pandemic levels. In April, only 17% of survey respondents made the same claim. Most owners continue to believe that the market will recover in the next 12 months, but the numbers appear to be shifting to a longer recovery timeline.

At the same time, operating expenses have increased during the recession. Almost half of apartment owners and operators have experienced a marginal increase in operating expenses and an additional 11% have experienced a significant increase in operating expenses. These operating expenses are difficult for landlords to absorb with rent prices declining and rent collections struggling. Freddie Mac Multifamily's 2020 Midyear Report expects a decline in gross income growth of 3.3% to 4.2% for the year, and the National Multifamily Housing Council's Rent Payment Tracker shows that rent collections in September are down 2.4% through the mid-month compared to the same time in August.

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.