RealPage Platform Pushes New York Metro Rents Higher Antitrust Class Action

The New York metro area has for a long time been one of the most expensive rental markets in the country. Yet the complaint for this class action alleges that a group of owners and operators of multifamily units in this market, along with software platform RealPage, have conspired to push prices even higher. It claims that RealPage’s YieldStar software allows the companies to track their competitors’ rents and to end price competition among them, in violation of the antitrust Sherman Act.

The class for this action is all persons in the New York City metro area that are direct purchasers of multifamily residential real estate leases from a Lessor participating in RealPage’s pricing software, or from a division, subsidiary, predecessor, agent, or affiliate of such Lessor, at any time between November 18, 2018 and the time the unlawful actions and their anticompetitive effects end.

The area involved in this case includes the five boroughs of New York City—Manhattan, Brooklyn, Queens, the Bronx, and Staten Island—plus certain surrounding areas, such as Hoboken, New Jersey.

Under normal conditions, the complaint alleges, those who offer multifamily residential real estate rentals in this area set rents competitively, to try to maximize the occupancy of their properties. If they had empty units, the complaint claims, they might, for example, offer price concessions, such as a free month of rent on a one-year lease. But this no longer happens, the complaint says, with those who use RealPage.

According to the complaint, the multifamily property owners and operators who are the defendants in this case subscribe to RealPage’s YieldStar platform, which “assesses hundreds of variables particular to each unit and proposed lease offered by the Lessor,” then “uses an algorithm to determine pricing for each unit—and said pricing is shared” with the other owners and operators.

The complaint claims that this eliminates competition in the market, since “more than 80% of the time, Lessors adopt that price—and that adoption rate is policed and enforced by RealPage amonst its clients, the Lessors. And, as YieldStar pushes prices higher, the participating Lessors reap supracompetitive profits.”

RealPage’s executives seem to have themselves underlined the success of the conspiracy, the complaint alleges, the complaint claims, such as at a real estate tech conference in 2021, when the complaint claims “RealPage executives marveled at skyrocketing rents as a result of YieldStar’s ability to push supracompetitive prices onto rentors[.]”

It quotes one as saying, “Never before have we seen these [rent increase] numbers” and another as saying, “I think [YieldStar] is driving [rent price increases], quite honestly.”

The complaint contends that “median asking rental prices were remarkably consistent (other than during the beginning phases of Covid-19) and have significantly increased in the geographic area during the Class Period…” A graph in the complaint shows this trend.

Article Type: Lawsuit
Topic: Antitrust
Tags: Antitrust, Real Estate, Residential Rentals or Leases