You own a 30-year old rental apartment building (15-storeys, 200 units). A developer purchasers the empty lot beside you and proposes a new rental building about the same size as yours, their rents will be 30% higher than your rents. What is your likely first thought? #BMPoll
@benmyers29 Not enough information to determine the correct answer. What is the condition of the old building? 30 years old is actually fairly new - 1990. Assuming the 30% premium is deliverable - the market is expanding and rents ought to be going up. But again, there are a many variables.
@benmyers29 You people are nuts. Additional supply lowers rents, or at least reduces their growth rate.
@benmyers29 other a hybrid of 1 and 2....you may initially lose some tenants (not sure how many 'cause we simply can't tell what your tenant mix) but some tenants that are less cost conscious and more amenity driven may be attracted to the new building.....but don't worry your new vacants..
@benmyers29 The other building would have new finishes so they would be justified in charging more than the 30 year old building that is so 80s
@benmyers29 Short term no impact as a portion of the tenants likely on rent control. Gradual attrition likely results in higher rents but those on rent control may not leave. Downside is likely higher capex as you now need to compete for tenants. Net net a higher average rent over time.