Michael L. Manelis
Executive Vice President & Chief Operating Officer at Equity Residential
Thanks, Mark. This morning, I will review our fourth quarter 2023 operating performance and our outlook for 2024. We produced same-store revenue growth of 3.9% and same-store expense growth of only 1.3% in the fourth quarter, both of which were in-line with our expectations. On the expense side, our low-growth in the quarter and full-year 4.3% growth were helped by modest property tax cost as well as the savings produced, as we continue to rollout initiatives focused on creating operating efficiencies and a seamless customer experience.
On the revenue side, the momentum in December was a little better than we thought, as sequentially we grew revenue in the fourth quarter by holding on to more occupancy, while maintaining positive blended rate growth. This set us up for a good start in 2024. Demand was solid across our markets and consistent with seasonal expectations. We finished the year with same-store physical occupancy at 96%, as we focused on building up occupancy in the slower part of our leasing cycle. Today, the portfolio is above 96%. As expected, we saw new lease rates go negative in the quarter as they typically do. Meanwhile, renewal for the quarter came in at 5.1%, which was slightly above our expectations.
Together, this resulted in a fourth quarter blended rate growth of positive 80 basis points. These healthy fundamentals led to outstanding revenue growth in our East Coast markets, and good growth in Southern California. As has been the case all year, the East Coast markets outperformed the West Coast, and by and large will likely continue to do so in 2024. As you saw in our earnings release, we have provided 2024 same-store revenue guidance range of up 2% to 3%. The building blocks for this growth starts with embedded growth of 1.4% and a midpoint assumption that both physical occupancy and cash concessions remain consistent with that of 2023.
We expect the year to follow the traditional pre-COVID historical patterns, with rent growth sequentially picking up in the spring and likely peaking in August. Our midpoint assumes renewals for the year averaged just over 4%, new lease change is relatively flat, which together produces blended rate growth of about 2%.This is more modest growth in the 2023 full-year blended rate growth of 3.1% and is reflective of a slowing job growth environment, offset by a mostly positive supply situation in our coastal markets where we have about 95% of our NOI.
As you can see from the stats in the release, January is starting out the way we would expect with new lease change improving, a strong percent of residents renewing and a renewal rate achieved that is healthy, albeit moderating a bit. While still early, all of these January trends support our outlook for the year, which includes a view that resident retention remains very good, as a result of both the benefits of a centralized renewal process, our enhanced data and analytics insights and the high cost and low availability of owned housing in our markets.
Turnover in the portfolio remained some of the lowest that we've seen in the history of our company, and we expect that trend to continue in 2024. Orange County, San Diego, Boston and Washington DC will lead the pack with expected revenue growth of approximately 4%. New York and LA will follow closely behind. At the moment, we expect slightly positive same-store revenue growth in San Francisco and Seattle. And in our expansion markets which reflect only about 5.5% of the total company NOI, we expect to produce negative same-store revenue growth given the unprecedented levels of supply being delivered.
As we look to the individual market, starting with Boston, with high occupancy and limited new competitive supply, this market should continue to perform well in 2024. The market is supported by a strong employment base and finance tech, life science, health and education. New supply deliveries will be about the same this year as they were in 2023, and this is a market where our urban assets have outperformed suburban ones lately and we expect that trend to continue in '24.
New York should continue to perform well this year, but won't reach the high-rate growth achieved over the last few years. Occupancies remain high and competitive new supply is limited, which led to record-high market rents causing some rate fatigue to be observed in late in '23. New supply deliveries will be similar to last year with very little being delivered in Manhattan, where a large part of our portfolio is located. Washington DC continues to outperform our expectations despite the delivery of a good amount of new supply. The market delivered over 13,000 units in 2023 and saw the great majority of those units absorbed. This year, the market will see a similar amount of deliveries, but demand has been strong and we expect this good performance to continue. We are starting the year with occupancies above 97%, which is a great position to be in.
In Los Angeles, we expect the tailwind to growth as we work through the delinquency and bad debt issues that have been concentrated here. We continue to make progress, although the court system remained slow, taking at least six months from our court filing to being able to get the unit back. Bob will give some more color on the impact of bad debt net on our 2024 earnings expectations.
New supply deliveries will be slightly higher this year with our Mid-Wilshire Koreatown in San Fernando Valley portfolios seeing the largest impact from this new supply. Strong retention and solid demand will continue to aid our ability to fill vacant units with paying residents in this market. Rounding out, Southern California, San Diego and Orange County should be some of our highest growth markets this year, driven by high occupancies and a general lack of housing. High homeownership costs make renting in these markets a more attractive option. San Diego will see more competitive new supply in 2024, while Orange County will see similar amount to last year.
In San Francisco and Seattle, we had little-to-no pricing power throughout 2023, and our base case expectations for this year assume that situation continues. We have seen periods of stability and then pullback. Concession use in both markets is widespread. We have strong physical occupancy with both markets being above 96%, which tells us, there is demand, although it is very price-sensitive. As Mark mentioned, the downtown areas of both markets continue to see improvement in the quality of life, but are still lacking the catalyst of return to office and/or job growth.
New supply in San Francisco this year will be up from last year levels, mostly due to an increase in the South Bay, although continued healthy demand in this submarket should aid the absorption. Seattle is likely to be the most impacted of any of our established markets when it comes to new supply deliveries, with increases in both the city of Seattle and the East side. The lack of expected job growth combined with this new supply have driven our low expectations in Seattle for 2024. Both Seattle and San Francisco continue to see less than normal inbound migration. Seattle in the fourth quarter, however, did see some relative improvement with new residents coming to us from other state. This positive trend is something that we will keep an eye on as we move through the spring leasing season.
Drawing new residents back to the MSAs in both Seattle and San Francisco would be a catalyst for these markets to outperform our expectations. In the expansion markets, our long-term outlook remains positive. That said, high levels of new supply are already pressuring rents and is likely to continue throughout 2024. At present, we are operating from a defensive position and starting the year with occupancies that are two to three percentage points above the market averages. Denver has demonstrated the most stability despite having limited pricing power in the portfolio, and we expect the market to produce slightly positive same-store revenue growth in 2024. Currently, Atlanta is using the least amount of concessions, but we expect a few of our assets to be very challenged due to the sheer number of lease-ups in close proximity, which will likely lead to negative revenue growth for the year.
In Texas, Dallas and Austin have widespread concession use and we expect all of our assets to experience direct pressure from new deliveries all year long, resulting in negative same-store revenue growth in these markets. So putting all of these factors together, our overall same-store revenue outlook for 2024 right now anticipate solid growth led by the East Coast markets and Southern California, which collectively is almost 70% of our NOI. We expect our coastal existing markets to outperform our expansion markets where unprecedented supply will impact operations near-term.
On the initiative side, in 2024 we will continue to focus on producing operating efficiencies and driving other income with projects tied to flexible living options, parking, renters insurance and monetizing technology deployed for the benefits of our residents. We are almost complete with the rollout of smart home technology across our portfolio, which will create further opportunities to share teams across properties and enable additional self-service options for residents. This, along with other ancillary income should lead to total other income growth of 30 basis points, excluding bad debt.
As we sit here today, we like our positioning and look forward to capturing the opportunities the spring leasing season brings, which will help frame pricing power for the full-year. I want to give a shout-out for our amazing teams across our platform for their continued dedication to their residents and focus on delivering these results.
With that, I will turn the call over to Alex to walk through our capital allocation activities and the transaction metrics.
