Angela Kleiman
Senior Executive Vice President and Chief Operating Officer at Essex Property Trust
Thanks, Mike. First, I'd like to express my gratitude for the exceptional operations and support teams we have here at Essex. As the challenge to our business continue to evolve, our team has also continued to step up, which speaks to the dedication, work ethic, and the can-do attitude across the organization.
On today's comments, I'll begin with key operational highlights of our major regions then focus on our outlook for the year, followed by an update on the progress we are making by leveraging technology, data analytics and transforming our operating platform.
We are pleased with our fourth quarter results of 4% year-over-year and 1.6% sequential growth in same property revenues. We have detailed on S-16 of our supplement, which shows the fourth quarter year-over-year, new and renewal rent spreads up by 17.1% and 10.7% respectively. The significant recovery in rents over the last year was bolstered by the occupancy and concession strategies we implemented throughout the pandemic.
To review our markets by region I'll begin in Southern California, which represents almost 45% of our NOI and was our best performing region in 2021. Through many economic cycles, we have consistently relied on Southern California for steady performance and during the pandemic, it has exceeded our expectations. The one caveat is the Los Angeles submarket. While it is also showing strong rent growth, this market faces offsetting challenges from the ongoing eviction moratorium and disproportionate bad debt.
Notwithstanding these challenges, we remain optimistic with the broader Los Angeles submarket because of the continued strategic commercial investments by companies like Warner Brothers, which is planning to develop a 1.3 million square feet of studio and office space in Burbank. This will be the largest studio development in the country and is expected to bring about 1,400 new jobs to the market. Film LA recently reported the production activity hit an all-time high in the fourth quarter and Apple recently proposed a 0.5 million square feet office development in Culver City, which will create approximately 2,500 new jobs.
The continued job growth and high cost of home ownership amidst a slight increase in supply deliveries in Orange County and San Diego are factors considered in our expectation for demand for rental housing and the basis for our 2022 outlook for Southern California market rent growth of 7.1%. Moving north to the Bay Area and Northern California, it is no secret that Northern California's rents have lagged the nation in the Essex portfolio average. We view the region as in early stages of its recovery. Unlike most markets across the country, which are effectively back to normal economic levels, the Bay Area has yet to fully recover due to ongoing COVID regulations such as mask mandates and delayed return to office, tempering the momentum of normal economic activities. We are seeing communications by Bay Area Companies informing employees of plans to return to office after Omicron case subsides and we remain encouraged by the large tech companies' expansion plans and commercial investments in our markets, as highlighted by Mike.
Furthermore, our supply delivery forecasts a decline in 2022. Thus, we anticipate rapid recovery in rent growth without requiring a comparable level of increase in housing demand. Keep in mind that our Northern California portfolio is mostly suburban and should benefit from those employees having fewer commuting days in a hybrid environment. These factors contribute to our expectations for Northern California to be one of our strongest rental markets in 2022 with market rent forecasted to increase by 8.7%.
Turning to our Seattle portfolio, which continues to perform well, we anticipate similar level of supply deliveries this year as last year with the majority concentrated in downtown Seattle. Because our portfolio skews to the East side in Bellevue and surrounding suburbs, the demand for our communities remain strong from the continued investments by several companies, most notably Amazon, which is committed to developing a second tower in Bellevue with construction to start this year, and is expected to create an additional 3,500 jobs. Therefore, we forecast Seattle's market rent growth at 7.2% for 2022.
Moving on to the advancements in our operating model. By way of background, our discipline and focus of investing in high quality submarkets has resulted in 70% of our properties being located within five miles of each other. With this competitive advantage in geographic concentration and innovation in technology and data analytics, we have re-envisioned Essex operating model with property collections. Essentially, we are transitioning from a dedicated team at an individual property to teams that will cover a collection of properties allowing each associate to specialize in specific function and improving our ability to cross sell among nearby properties. By organizing properties into collections and centralizing certain administrative duties, we expect to generate more efficiencies across the portfolio. We have already implemented this collections model in Orange County and San Diego and have achieved a reduction in personnel by approximately 10% to 15% through natural attrition.
In addition, our data analytics has determined that our ability to cross sell neighboring communities has increased by over 800 basis points following the adoption of the collections model. We plan to complete the roll-out of the collections operating model to the remaining regions by the end of this year. While Essex has been efficient historically with each associate covering 40 units prior to 2019, with recent enhancements, we currently have each associate covering 43 units across the entire portfolio. Further benefits are expected in 2022 and thereafter as we complete our technology and other implementation plans. We are currently co-developing proprietary applications with partners from our ET Ventures Fund and other software developers that will enhance the associate and customer experience.
One example of advancements in our operating model over the past months has enabled 100% contactless tours which currently consists of 92% self-guided tours and 8% virtual tours. As part of our technology initiative, we are starting with a roll-out of Alloy Access, a SmartRent common area access solution, which will elevate the resident experience while also further the productivity of our operations team by enhancing security, usability and monitoring along with improving the effectiveness of the self-guided tours for prospective customers.
In addition, we are working with Funnel to co-develop a tailored solution to further automate our platform, which we plan to roll out later this year. We believe this will directly benefit both the associates and customers through streamline systems, on demand features and link communications across properties, which will meaningfully accelerate the timetable to turn prospects into renters. We integrate these advancements with our data analytics platform to provide new operational insights. For example, leveraging newly available data on our leasing patterns from Funnel has improved the quality and effectiveness of our customer interactions. We have also applied advanced analytics with data from site plan to streamline our maintenance workflow, which reduced our unit churn times by 10% in the fourth quarter on a year-over-year basis, despite COVID-related labor challenges.
We expect that these initiatives will continue to provide us with additional levers and insights to improve our revenue growth and operating margins in the coming years. With that, I'll turn the call over to Barb Pak.
