It is budget season for apartment operators. And locking down numbers for what promises to be an unpredictable 2024 is no easy task.

“Rents are starting to moderate and expenses are going up,” Cindy Clare, chief operating officer for Greensboro, North Carolina-based owner and manager Bell Partners, told Multifamily Dive. “So budgeting is a lot harder right now — trying to figure out how you are going to show some NOI growth and meet the needs of your clients and owners. It is something that everybody is focused on.”

One thing operators can try to control is expenses. Clare said that Bell will focus on leveraging its volume to ensure that it's getting the best pricing from suppliers, among other things. Efficiency is the key, but companies can’t cut too much.

“What are the ways that we can be more efficient, but still provide the customer service that we need and take care of our residents?” Clare said.

As Bell and other operators grapple with expenses during budget season, they also need to get a handle on rents in a slowing market. Here, she talks with Multifamily Dive about seasonality returning to the rental market, keeping occupancies high and mounting supply in some metros.

This interview has been edited for brevity and clarity.

MULTIFAMILY DIVE: Are you seeing seasonality return to the market?

CINDY CLARE: We’re back to a more normal cycle than what we've seen in the last few years. So, seasonality is playing a role. Typically, at this time of the year, we start focusing on occupancy. We want to make sure we go into the winter season with occupancies higher so that we hit the ground running when we get into the first of the year. 

So while we still look for some rent growth and we certainly do renewal increases and all of those things, we also push our occupancies. In our revenue management, we look to make sure that occupancy is more of a focus than just rent growth.

Are you incentivizing renewals across the portfolio right now?

I wouldn't necessarily say incentivizing renewal because I think that what we do is look at renewal increases a little more carefully. We want to make sure that we're always focused on retention because that's the most important thing to us. 

But we also look at where our occupancy is. It's a property-by-property decision. If occupancies are strong and if our exposures are low, we're going to continue being a little more aggressive on the rents. 

But if we're starting to see traffic slowing down and occupancies are not quite where we want them to be, then we're going to make adjustments to get the occupancy. 

In an ideal world, where would you want occupancy to be at a property?

In general, we want to be somewhere between 94% and 96%. The sweet spot is about 95%. 

How is the wave of supply coming online in some metros affecting your strategy?

In markets where there's a lot of supply, you're going to pull back probably a little faster so that you can maintain the occupancy that you have. So in a market that's a little more supply-constrained, you may still be a little more aggressive. It's going to depend on the property. 

Are concessions coming back?

We are starting to see, in some markets, concessions creep back in. You may not be lowering your rents, but you're now offering a small concession to get people to move in so that you can get your occupancies up where you want them. And I expect that in 2024, we'll probably see a little more of that as new supply is delivered.

Are floating-rate loans impacting your clients? 

We have not felt that. We have a lot of institutional clients that are probably better able to weather those kinds of things. But it's definitely something that's going to impact the market in 2024. 

Where do you expect to see issues?

It can be a new development that hasn’t gotten permanent financing or people that had adjustable rate loans or they have a balloon that’s going to mature in 2023 or 2024. I'm not sure it's going to be an asset-class thing. I think it's going to be across the board, and it's really going to depend on the timing of when you had your loan.

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