Podcast Summary: The Rent Roll with Jay Parsons

Episode #56: Budgeting Season – Tips For 2026 with Sue Ansel
Date: October 23, 2025
Host: Jay Parsons
Guest: Sue Ansel, CEO of Gables Residential

Overview

In Episode 56 of The Rent Roll, host Jay Parsons explores the challenges and opportunities of "budgeting season" in rental housing, with a special focus on what multifamily operators should expect for 2026. Jay is joined by Sue Ansel, CEO of Gables Residential—one of the nation’s largest and most respected multifamily owner/operators. Their discussion covers operating expense (OPEX) trends, the rebounding (or not) of rent growth, the burning off of concessions, the impact of technology on costs, market-specific forecasts, and the ever-present uncertainty around macroeconomic conditions.

Key Discussion Points & Insights

1. Recent OPEX (Operating Expense) & Revenue Trends (00:03–33:12)

– OPEX Inflation Cooling Dramatically

• OPEX growth: After years of high expense inflation, especially between 2020-2024, OPEX inflation has cooled notably across categories.
• Insurance costs: After peaking at +37% YOY in 2023, insurance costs are now down 9% YOY in Q3 2025, offering relief but remaining far higher than pre-COVID levels.
• Property taxes: Growth has slowed as valuations are suppressed by higher cap rates and low transaction volumes.
• Other expenses: Admin, payroll, and utilities are stabilizing in the 3–4% growth range nationally.

– Exception Categories

• Marketing spend: Up 7% YOY, driven by a hypercompetitive leasing environment, ongoing high vacancies, new marketing channels/concessions, and proptech investments.
• Turnover costs: Flat or declining due to operator focus on tenant retention, but could rise in high-supply markets if negative or flat renewal trade-outs are avoided at all costs.

– Revenue Side: Weak Rent Bumps & High Retention

• Expectations for normal rent growth (2–3%) in 2025 did not materialize; new lease trade-outs remain negative or flat in high-supply markets.
• Renewal rent growth is holding steady (~3.7% nationally), driven by “stickier” renters and improved retention strategies.
• Retention rates: Historic highs—expected to remain structurally higher post-COVID due to a range of demographic and operational factors.

– “Gain to Lease” and Renewal Headwinds

• Loss-to-lease, built during the high-inflation peak of 2021–22, has largely burned off—creating potential headwinds as some operators are now faced with higher renewal rates than new lease offerings.
• Emphasized the operational risk: “It’s really, really hard to ask a resident in good standing to pay more than someone coming in through the front door signing a new lease.” (26:27, Jay Parsons)

– Forward Outlook:

• Rent growth recovery expected as supply plummets to decade lows in 2026.
• Effective rent may increase simply from the “burn-off” of concessions, even before headline (asking) rents recover.
• Recovery will vary by market, and revenue (NOI) lag is expected; 2027 may see the most significant revenue improvement.

2. Industry Headlines Rundown (33:12–33:58)

• M&A: FPI rumored merger with Asset Living (sixth and second largest property managers).
• Unit Mix Mismatch: Strong renter demand for two- and three-bedroom units, while studios and one-bedrooms exceed demand.
• Capital Trends: Increased acquisition of older multifamily vintages (1960s or older) due to financing and distressed opportunities, contrary to expectations that newer assets dominate transactions.
• New Developments: Irvine Company’s major new developments in California.
• Affordability: Sunbelt and Mountain cities remain affordable compared to large global metros.

3. Interview: Sue Ansel, CEO of Gables Residential (33:12–58:45)

Sue's Multifamily Background (33:38–36:41)

• Serendipitous entry into real estate post-college; growth from small firm to major management roles.
• Long tenure at Trammell Crow Residential, which evolved into Gables; experience with both public and private REIT structures.

Overview of Gables Residential (36:42–38:02)

• 30,000 units in 16 markets, heavy presence in Sunbelt (“smile” states), and lifestyle markets.
• About 2/3 class A, 1/3 class B assets, with notable affordability within their portfolio (77% affordable at 120% of area median income).

Reflections on Budgeting the Last Five Years (39:32–41:55)

• Described budgeting from COVID-19 through inflation and supply surges as extremely difficult.
• “There was no normal… the stimulus dollars also created, you know, real inflation on the expense side…” (39:32, Sue Ansel)
• From 2010–2020, Gables’ controllable expense growth averaged <2%/year—now, major variance but recent team performance in budget forecasting praised.

2026 OPEX Outlook (43:06–45:10)

• Insurance: Substantial renewal cost reductions in 2024 and 2025 have returned costs to manageable levels for Gables.
• Property taxes: Benefit from declining valuations and less aggressive tax authorities due to market and transaction conditions.
• Utilities: The “least controllable” expense, closely monitored.
• Overall: “It feels like 2026 that those costs will be in pretty good shape…headed back towards sort of more normal operating costs.” (45:10, Sue Ansel)

Technology & Centralization Impact (45:37–47:31)

• Centralization, especially back-office functions, and partnerships (e.g., with Avalon Bay’s central contact center) have enabled cost control and improved focus on sales/service.
• Noted that marketing technology in particular has provided concrete cost savings—“we’ve seen over the last couple of years about an 8% decrease in marketing costs.” (46:45, Sue Ansel)
• The biggest challenge with tech is change management, not the tech itself.

Revenue & Rent Growth for 2026 (48:22–53:24)

• The industry anticipated a stronger recovery in 2025 that didn’t arrive; growth for 2026 remains highly market-dependent.
• “If the economy continues to be solid, I think we will begin to return to more normal revenue growth again—back to sort of the two to four range.” (48:39, Sue Ansel)
• Rent growth will be dictated by supply, job growth, and local conditions—even within markets, submarket risk profiles differ.

Concession Burn-Off Reality (50:07–53:24)

• On whether operators can simply “burn off” large concessions at renewal:
  “I don’t think you—we can just wave your magic wand and say that it goes away… It is absolutely challenging if you have become quite dependent on using a concession strategy to burn that off in chunks.” (51:00, Sue Ansel)
• Retention rates have risen because moving is expensive and homeownership is less accessible; visibility into market pricing makes renters savvy.

Market-by-Market Outlook (54:07–56:39)

• 2026 winners may include “recovery markets” (e.g., San Francisco), West Palm Beach, parts of the Midwest like Chicago, and strong continued performance from Washington D.C.
• Sunbelt and Mountain markets (e.g., Austin, Phoenix) will take longer to absorb supply but remain fundamentally sound long-term.
  “Austin is going to be just fine… needs to work through the supply issues, but long term Austin is going to be just a terrific market, in my opinion.” (56:39, Sue Ansel)

Biggest Unknown for 2026 (57:26–58:32)

• “It’s really macroeconomic conditions…what will happen with job growth?” (57:26, Sue Ansel)
• “If the economy slows down, that will certainly have its impact on us. If the economy stays steady, I like the future.” (58:32, Sue Ansel)

Notable Quotes & Memorable Moments

• On rent concession “burn off”:
  “I don’t think you—we can just wave your magic wand and say that it goes away… It is absolutely challenging if you have become quite dependent on using a concession strategy to burn that off in chunks.” – Sue Ansel (51:00)
• Market transparency:
  “There is good transparency in the market of what rents are across the submarkets.” – Sue Ansel (53:24)
• On expense control:
  “The one controllable expense that we—we have less control over is utility costs.” – Sue Ansel (45:10)
• Biggest variable looking forward:
  “I think the uncertainty for 2026 is what… will happen with job growth? What’s going to happen with macroeconomic conditions?” – Sue Ansel (57:26)
• On rising retention:
  “It is expensive to move… we have seen retention rates across the portfolio go up quite a bit.” – Sue Ansel (52:34)
• Jay's advice to owners clinging to positive renewal trade-outs:
  “If you have an owner… who just refuses to see anything other than positive renewal trade out, you know, send them this podcast, send them my way.” – Jay Parsons (31:36)

Timestamps for Key Segments

• 00:03 – 33:12: OPEX & revenue trends, industry data, headlines, and market analysis by Jay Parsons
• 33:12 – 36:41: Interview introduction & Sue Ansel’s career background
• 36:42 – 38:02: Gables Residential portfolio summary
• 39:32 – 41:55: Lessons from budgeting through COVID/inflation
• 43:06 – 45:10: Detailed look at OPEX—insurance, taxes, utilities
• 45:37 – 47:31: Technology/centralization’s impact on cost control
• 48:22 – 53:24: Rent growth, comeback of new lease rents, burning off concessions
• 54:07 – 56:39: Market-by-market outlook for 2026
• 57:26 – 58:32: Top uncertainties for 2026 and closing thoughts

Conclusion

This episode offers a highly practical, data-driven discussion to help multifamily operators, investors, and their teams navigate 2026 budgeting—emphasizing both the stabilization of expenses (with particular relief on insurance and taxes), the continued uncertainty around rent growth (especially the complex reality of burning off concessions and managing renewals), and the critical importance of adaptability to macroeconomic conditions. Sue Ansel’s grounded perspectives and Jay Parsons’s contextual framing create a must-listen for anyone deep in the budgeting trenches for the upcoming year.