CHICAGO-The time is now to increase apartment rental rates,according to Equity Residential executives duringtheir first quarter conference call Thursday. The SamZell-led REIT, which owns 427 properties and may bid $1.5billion for a share of Denver-based Archstone,said the lost leases will be replaced by renters who can afford thehigher rates.

The locally based trust reported revenue growth of 5.5% and netoperating income growth of 7.8% in the first quarter, but admittedit faced resistance to price increases in its core markets. “Webelieve trading some occupancy or holding those higher rates isactually a good strategy at this point in the cycle,” saidFred Tuomi, president of property management,during the call. “As we enter the leasing season, we fully expectand begin to see a recapture of that occupancy at those higherrates. New residents still showed no problem at accepting andachieving these new rates.”

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This cycle of renters leaving but holding increases is occurringin major markets such as New York City, Boston and San Francisco,he said, but the trust believes the new lease potential is outthere. Occupancy is rebounding up to 6% above last year in New YorkCity, 10% in Boston and up to 12% in San Francisco, Tuomi said.