By Joe Bousquin, Multifamily Editor and Writer

For Chris Long, director of pricing and revenue management at Denver-based UDR, there has been a bright spot among the declining rents he’s seen in submarkets nationally. While new rents have had all the trajectory of ducks being shot from the sky, his renewal leases have stayed relatively steady, and some have even posted small gains.

"In markets where new lease prices are down 7 percent, we’ve been able to keep renewals flat, or even see an increase of 1 percent or so," Long says. "There’s definitely been softening, but you’re not seeing renewals come down as much as new leases."

Long’s experience at UDR, which owns 44,571 units nationally, illustrates one of the main takeaways from the 2009 RealPage User Conference. Namely, while you probably feel like you have to offer the world to gain new residents or keep the ones you’ve already got, renewals are one area where you still have some pricing power.

By using RealPage’s YieldStar Price Optimizer revenue management application, which calculates recommended rents for both new and renewal leases using supply and demand data for specific properties and floor plans, Long and other multifamily pros have been able to hold their renewal ground, even as the broader market crumbles.

"Renewals are tending to be less price sensitive than the new leases on the market," Long says. "There's obviously less competition for those leases, and renewals are still significantly higher."

Jeffrey Roper, principal scientist for YieldStar, detailed the trend to conference attendees in a session dubbed "How Do Your Properties Compete?" By looking at specific property data culled from more than 13,000 properties on the Price Optimizer system nationally, he showed conference-goers that on average, renewals are fetching a 5.1 percent premium over new leases. Over the last 18 months, that spread has been consistently widening; at the beginning of 2008, it was just 1.5 percent.

"What this shows us is a very interesting aspect of renter psychology right now. Namely, in this environment, people want stability, and they don’t want to move," Roper said. "The outside world is changing so much on people right now, that they are going to try to control whatever they can. Where they live is something they can control. What the model seems to be saying is, the more chaotic the world becomes around us, the more insensitive to price they’ll become."

The resilience of renewals was a consistent theme of sessions at the Hilton Anatole in Dallas, and a recurring thread of hallway conversation. It represented a positive for multifamily operators to focus on as they grapple with the worst rental market many have ever seen. Namely, even in the midst of the longest recession since World War II, pros using tools such as Price Optimizer have been able to identify and capitalize in areas where money is still on the table. As RealPage President Steve Winn articulated during an interview, "The message here is, don’t give up on this economy. There are ways to deal with it. There are fairly significant opportunities to cut costs and increase revenue."

For example, by using Price Optimizer, Long has been able to maintain occupancy rates right around 95 percent in hard hit markets such as Orange County, CA, which has slumped 7 to 10 percent since the beginning of the year. He’s done so by adjusting his new leases downward, while maintaining his renewal leases at somewhat steady rates. At the same time, he’s been able to cut less deeply at specific properties, where the Price Optimizer model showed higher-than-market demand at the property level.

"We’ve had some properties that were barely affected at all, where their local operating environment was very good," Long says. "We have a handful of properties in that market that are only off 2 to 3 percent. But the only reason we’ve been able to maintain those prices is because we’ve been able to react very much on a property-specific basis, as opposed to market wide, which might have been a typical reaction in the past. We would not have been able to react in this way if we had not been using the Price Optimizer system."

None of this is to say Long wears rose colored glasses. He freely acknowledges that the widening spread between new leases and renewals is more the result of new leases going off a cliff, while renewals have reached a plateau, or, in some cases, remained slightly positive. And he stresses the importance of showing existing residents today that they are valued, so they won’t be tempted to shop around.

"We want to take care of our residents, and keep as many as possible," Long said. "We were increasing a lot of our renewals on a consistent basis, but we’re not doing that anymore," Long says. "In this environment, we want to let residents know that at times like these, we’re not going to jack their rent up. I think as long as you’re fair with them, and give them good service, they’ll stay, because after all, it is their home."

In this environment, home is where you want your residents to stay.