NOAH Apartments: Rents Are Already Ahead of the Comp Set — Stay the Course on Gradual In-Place Increases

The market-rent case for pushing rents doesn't hold up, and the data actually reinforces your instinct to go gradual. Three things drive the call:

1. There's no gap to capture — the property is priced above its comps, not below them. NOAH's in-place rent averages $1,366.84/unit/month . A sample-weighted read of eight comparable garden/low-rise properties in the immediate 78209/Alamo Heights corridor comes in at $1,307.26/unit/month — NOAH sits 4.4% above that set, not below it . One flag on the property's own data: the "asking rent" your own leasing team is quoting ($1,505.90 avg) is drawn from only 10 currently-marketed units — too thin a sample to trust, and it doesn't even move consistently by bedroom count . The comp set, built on far larger in-place samples, is the more reliable read, and it says you're already at the ceiling for this vintage and location.

2. Turnover is destroying value right now, not creating it. New leases are signing 10.1% (‑$157.50/unit) below what the outgoing tenant paid — a negative tradeout, which is the market telling you turnover doesn't pay at today's rents. Layer on make-ready, marketing, and ~55 days of vacancy per turn , and the 46 units/year NOAH naturally turns (79.5% retention) are running an estimated $262,793/year net negative to NOI — $175,853 in turnover cost plus $86,940 in rent given up on re-lease . A gradual 4% renewal increase across the ~213 occupied units instead nets $139,746/year, with none of that turnover drag. That's a $402,539 annual swing in favor of holding tenants in place — before counting the leasing-risk premium of pushing vacant units into a softening submarket.

3. Tenants can absorb a gradual increase, but not an aggressive one. Rent-to-income sits at 24.6%, about average for the MSA , and tenant household income is growing a healthy 4.89% year-over-year (78th percentile vs. the MSA) — there's real room. But credit stress is rising underneath that: the past-due rate on tenant credit accounts jumped 9.6 points year-over-year to 13.75%, and revolving utilization above 75% ticked up too . Average FICO of 645 is a near-prime base with limited cushion — 46% of tenant households sit in the $0–25K net worth tier . That combination argues for mid-single-digit renewal increases, not double-digit pushes: enough to capture the income growth, not so much you accelerate move-outs into a submarket where occupancy (90.5%) and tradeout (‑2.2%) are both already softening .

One correction to your framing: the data shows the last renovation was 2011 — 15 years ago, not "recently renovated." That matters because it removes the strongest argument for a rent premium (fresh capex justifying a mark-up); it's a well-held 1994-vintage asset trading at parity with comps largely renovated more recently (2014–2020) at similar or lower rents. If a renovation program is actually underway or planned, that's a different — and better — lever than pushing rent on the existing unit mix.

Property	Distance from Subject (mi)	Units	Year Built/Renovated	Building Style	In-Place Rent Avg ($/mo)	Occupancy	Sample Size (n)
NOAH Apartments (Subject)	—	224	1994/2011	Garden	$1,366.84	95.1%	n=102
The Quarry Alamo Heights	0.1	306	1993/2017	Low-Rise	$1,499.97	87.9%	n=267
Avita Alamo Heights	0.2	312	2015	Low-Rise	$1,381.58	90.4%	n=165
Villa Dijon	0.3	104	1970	Low-Rise	$1,507.00	99.0%	n=51
Sunset Heights	0.9	152	1969/1985	Garden	$1,169.82	86.8%	n=146
The Chelsea Apartments	0.9	90	1970	Low-Rise	$1,352.50	97.8%	n=82
Legacy Heights	3.0	306	2009	Garden	$1,274.64	96.7%	n=222
Wilshire Woods Apartments	3.4	320	1968/1998	Garden	$955.55	95.9%	n=55
The Beverly	3.7	137	1968/2014	Low-Rise	$1,159.83	89.8%	n=125
Sample-Weighted Comp Average	—	—	—	—	$1,307.263	—	—

The path forward: hold the gradual in-place strategy — model it at 3–4% at renewal (the workbook below lets you flex that up to 6% and see the swing), skew lighter for tenants already showing utilization or delinquency stress, and don't chase turnover. With a negative tradeout market-wide, marking units to market at turn currently means marking down. Revisit the comp gap quarterly — Alamo Heights submarket occupancy and tradeout are both softening (‑3.5pp occupancy YoY, ‑2.2% tradeout) , so today's "no upside" read could tighten or loosen from here.

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I built out the full comparison as a live model — flex the renewal % and turnover-cost assumptions and it recalculates both paths and the swing between them.