2025 Planning Insights: Exits, Market Softening, and Strategies for the Year Ahead

[Jonathan Bombaci]

We’ve just finished our 2025 planning meetings for our six largest projects, and it’s been an interesting process. In terms of feedback from our team, we’re leaning towards buttoning down the hatches, keeping rent increases low, and focusing on maximizing occupancy in our New England markets. We’re seeing significant softening on new placement rents, I’m interested to know if others are seeing similar trends in their own portfolios and what they're planning to do next year. 

Here are some key takeaways and areas I’m curious to hear others’ thoughts on:

• - Two of our projects have maxed out on rental income and are now ready for an exit. We’ve hit the ceiling in terms of what we can push on rent, and it seems like this year might be the right time to sell.
• - One of our projects has fallen so far behind that the only viable option to get back on track is an early exit. It’s a tough decision, but we’re adjusting our strategy to align with market conditions and our timeline.

Having come from a corporate background, I'm used to doing these kinds of planning exercises. We take the T12 roll it forward, we strip out anomalies and one-time expenses and then layer in base assumptions and any known large expenses that are planned for the next 12 months. We then use this to compare actuals to throughout the year and normally do a reforecast at the end of Q1 as thing evolve and change.

I’m curious to hear how others are approaching their 2025 planning. Are you seeing similar challenges with rent growth? How are you planning for softening rents and market fluctuations? What are you doing differently this year based on the current market climate than in prior years?

Looking forward to hearing your thoughts and strategies!