Michael L. Manelis
Executive Vice President & Chief Operating Officer at Equity Residential
Thanks, Mark, and thanks to everyone for joining us today.
This morning, I will review our first quarter 2024 operating performance and our positioning as we start the leasing season. We're off to a very good start thus far. As Mark mentioned, demand remains good across all of our markets, supported by a continuing solid job market and high employment in our affluent renter target demographic. One of the real highlights of the quarter was our turnover, which is the lowest we have ever seen. Our focus on customer satisfaction, harnessing data and leveraging our centralized renewal team to drive results is definitely having an impact here. In the first quarter, we renewed more than 61% of our residents, which is one of the highest percentages that we have seen. A special shout-out to New York, Boston and Seattle, who set their own high marks and greatly contributed to this result.
Our first quarter same-store revenue growth exceeded our original expectations, including very good performance in San Francisco and Seattle, which I will discuss in a moment. This positions us very well for the year, but we acknowledge that this is just the beginning of a critical primary leasing season. Our efforts to build occupancy in the fourth quarter of 2023, coupled with continued strong demand and high resident retention, have resulted in both slightly above average rent growth since the beginning of the year and a 50-basis point quarterly sequential gain in physical occupancy. At 96.5% occupied this month, which is one of our highest reported occupancies in April, we have a lot of confidence that we will be able to continue to grow rates through the leasing season.
The high percentage of residents renewing that I previously mentioned is also a big factor in this strength. In terms of market same-store revenue growth, the East Coast markets in Southern California are producing leading growth, as we expected, with San Francisco, Seattle and the expansion markets following in that order. As we think about these markets' performance relative to our expectations, New York and Washington, DC are running ahead of expectations, while Boston and Southern California and the expansion markets are in line. San Francisco and Seattle are also running ahead, but remember, these markets have been historically volatile. So we remain cautiously optimistic that we will hold on to the gains in these markets for the remainder of the year. Now a little more color on the individual markets before closing out with expenses and commentary in other income and initiatives.
Starting in Boston, year-to-date revenue performance is in line with the expectations. City of Boston is currently 97% occupied and we have very little competitive supply to deal with. Concession use is little to none in this market. And overall, we continue to expect Boston to deliver some of the best full year revenue growth in the portfolio. As I mentioned, New York is performing well, with both strong demand and pricing power. The market is over 97% occupied and has very little competitive new supply. So far, we seem to have moved past the rent fatigue we saw in the market in late 2023 and expect good things from this market in '24. Hats off to Washington, DC as this market is outperforming our revenue growth expectations even after a strong 2023.
We're benefiting from a very solid employment picture here, particularly in the defense sector which is driving consistent, stable high occupancy and real strength in our retention. We see good results across the whole market, but The District has recently begun lagging our suburban assets, likely due to nearby supply. Overall, we still expect Washington, DC to deliver a good amount of new supply in 2024 with nearly 13,000 competitive units. So we do anticipate the pressure to continue to grow as the year progresses. In Los Angeles, we see good demand, but not a lot of pricing power at the moment due to the additional units being brought back to the market through the eviction process. Our portfolio is 96% occupied, and we continue to make progress on the delinquency and bad debt situation, which should be a tailwind for growth in 2024.
Time frames for processing evictions have recently improved from 9 months to 6 months, which should help us make more progress going forward. But they still do remain nearly twice as long as they used to be. That being said, we are very encouraged by the recent improvement. Rounding out the rest of Southern California, San Diego and Orange County are continuing to be very strong performers. The general lack of housing is keeping occupancies high. Home ownership costs are also high here, which makes renting in these markets the more attractive option. San Diego will see more competitive new supply in 2024, while Orange County will see similar amounts to last year, with limited pressure at a few of our Irvine locations. Now for the markets that may be of most interest: San Francisco, Seattle and the expansion markets of Dallas-Fort Worth, Denver, Atlanta and Austin.
For the 2 West Coast markets, remember that we entered the year with relatively modest expectations but potential for upside. So far both markets are doing better than we expected, but it's early and both remain show-me stories as we saw periods of stability and pullback in 2023. In San Francisco, we are well occupied but would like to see continued improvements in pricing power. The South Bay, East Bay and Peninsula continue to perform better than our Downtown portfolio. The situation here remains the same as the market lacks the catalysts, either job growth or more robust return-to-office policies, to create true pricing power. Concessions remain prevalent in the Downtown submarket, but are being issued at a lower rate than they were in the fourth quarter, consistent with what you would seasonally expect.
In Seattle, we carried strength from December into the early part of the year, leading to improved occupancy and the ability to move up rental rates, which is evident in our new lease growth for the quarter. That being said, we do expect a fair amount of competitive new supply in the market in 2024, which could temper growth. The East Side is performing better than the City of Seattle, and our Redmond assets are performing very well despite having some direct pressure from a new lease-up. Overall, the downtowns of both markets are showing real improvement in the quality of life, and the local political situation continues to get much more constructive as a focus on bringing these cities back to the thriving environments they were prior to the pandemic remains front and center with both policymakers and citizens.
Recent primary elections in San Francisco were very encouraging as voters supported candidates who are focused on addressing safety and the quality-of-life challenges. Finally, some commentary on our expansion markets. Strong demand and a favorable regulatory environment continue to confirm our positive long-term outlook for these markets. Unfortunately, however, in the near term, we are seeing the pressures from high levels of new supply being delivered in 2024. Market occupancies are lower than our established markets and concessions are prevalent. So far, concession usage at stabilized asset properties in Atlanta, Dallas-Fort Worth and Denver are running at about 30% of applicants getting about 4 to 6 weeks. And in Austin, it's 60% of applicants getting about 6 weeks.
Operating conditions are challenging across all of these markets, but Dallas appears to be more resilient, followed by Denver, Atlanta and then Austin. The job growth numbers in both Austin and Dallas are some of the highest in the country, which is clearly aiding in the absorption of some of the new supply. But the volume of deliveries is high and going to continue to grow throughout the year. With regards to bad debt and delinquency, the first quarter results were in line with our expectations. As I mentioned, we continue to see improvements in the time it is taking to process evictions in LA, which is where the majority of our delinquent residents are, which is resulting in a decrease in the number of long-standing delinquent residents that we have. This is an encouraging sign and continues to support our view that we will see overall improvement in bad debt net contribute 30 basis points to our same-store revenue for the full year.
Now let me hit on some highlights on expenses. Our 1.3% growth in the quarter was better than expected and driven by a decrease in both utilities and repairs and maintenance, coupled with pretty flat on-site payroll expense growth. On the utility expense, we primarily benefited from lower commodity pricing. We also intend to take advantage of federal and local incentive programs to continue to accelerate our sustainability efforts and moderate future utility growth. For example, we have 26 future solar installations planned, in addition to our 55 active systems, which will help reduce our future overall assumption. Our repairs and maintenance expense decrease was driven primarily by lower turnover costs and, to a lesser degree, maintenance expense, which was unusually elevated in the prior year. Once again, our disciplined approach to expense management has continued to pay off.
On the innovation front, as we have previously discussed, we will be focused on a number of initiatives to drive both revenue growth and operating efficiencies. Specific to other income, our expectation remains unchanged that this will be a contributor of 30 basis points to our full year same-store revenue growth. During the quarter, we delivered 60 basis points, which was slightly ahead of our original expectations and mostly due to faster implementation of our parking revenue optimization program. In addition to our efforts around other income, we have been very focused on areas of opportunity like leveraging artificial intelligence into our business process.
As early adopters of these AI interactions, we are thrilled with the performance of these tools. Over the past year, our AI leasing assistant, Ella, has engaged with just over 600,000 customer inquiries, set 2 million responses addressing prospect questions, and booked over 80,000 appointments. Leveraging this type of automation at the top of our demand funnel has been incredibly effective, allowing us to be nimble with increasing initial traffic demand without impacting our remaining on-site employees' ability to provide high-touch customer interactions when needed.
We're excited to share that in the coming quarter we will begin testing an AI resident assistant, helping existing residents 24/7 with common questions about their community service and even their account statements. I want to give a shout out for our amazing teams across our platform for their continued dedication to innovation and enhancing customer service. As we sit here today, we're 96.5% occupied and continue to see strength in our renewal process, which positions us very well to capture the pricing power opportunities that the peak leasing season will bring.
With that, I turn it over to the operator for Q&A.
