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New suit alleges RealPage, Greystar, others colluded on student housing | Dump Trucks Charlotte NC

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On the heels of a class-action suit against RealPage and seven apartment operators in October, a University of Washington student filed a new lawsuit alleging collusion in the student housing market among some of multifamily's biggest players.

The plaintiff, Gabriel Navarro, who filed the suit in the U.S. District Court for the Western District of Washington in Seattle, claims there was an unlawful agreement among student housing managers to “artificially inflate the prices of student housing across the United States,” including in Seattle; Ann Arbor, Michigan; and Gainesville, Florida.

The student property managers named in the suit, filed Oct. 18, read like a who's who of multifamily and include some of the biggest operators in the rental housing industry. They are:

  • Charleston, South Carolina-based Greystar Real Estate Partners
  • New York City-based Cushman & Wakefield
  • Des Moines, Iowa-based BH Management Services
  • Camden, New Jersey-based The Michaels Organization
  • Austin, Texas-based Campus Advantage
  • Denver-based Cardinal Group Holdings
  • Chicago-based CA Ventures Global Services
  • Raleigh, North Carolina-based D.P. Preiss Co.
  • Charleston, South Carolina-based GEDR LakeView — a columbus oh dump truck company affiliated with Greystar that manages Navarro’s apartment complex

Each of the companies named in the suit used RealPage's YieldStar revenue management platform, which employs an algorithm to suggest asking rents for vacant units. Similar to the pricing programs airlines and hotels have used for decades, revenue management has only been widely adopted in the multifamily industry more recently. Developers of the software have said they were conscious of collusion concerns even when the technology was in its infancy. 

The lawsuit argues that “RealPage provided the platform and the algorithm for collusion.” In doing so, it gave student housing operators the ability to collaborate and track competitors’ rents, according to court documents.

The suit points out that student housing operators have separate challenges compared to conventional apartment managers. Before RealPage, it argued that these companies set prices independently with an emphasis on having “heads in beds” when the school year started. But the introduction of this technology changed that use-it-or-lose it approach by giving operators a peek behind their competitors' pricing curtains, the suit alleged.

“RealPage provided pricing information for student housing providers that allowed them to closely analyze their pricing in comparison to their competitors at a bedroom-by-bedroom level,” the suit said.

RealPage said it “strongly denies” the allegations and will vigorously defend against the lawsuit. "Beyond that, we do not comment on pending litigation,” a spokesperson told Multifamily Dive.

Multifamily Dive reached out for comment to each of the housing providers named and received a response from Campus Advantage. 

“Campus Advantage strongly disagrees with the unsubstantiated allegations in the lawsuit and intends to vigorously defend against the claims,” according to the company. “Campus Advantage is proud of its track record creating successful communities.”

Apartment mangers lawsuit

Two weeks ago, RealPage and nine conventional apartment operators, including seven in the NMHC Top 50, were sued in similar class-action litigation in the U.S. District Court for the Southern District of California from five renters alleging antitrust violations under the Sherman Act. 

In the previous suit, the plaintiffs alleged that the apartment managers used “unit-specific pricing and supply recommendations” from RealPage. In the process, they coordinated “both pricing and supply,” according to the suit. 

The earlier suit also claims that RealPage asked for “discipline” among apartment managers, referred to as lessors, essentially providing them with marching orders for how to collude effectively. 

“To encourage adherence to its common scheme, RealPage explains that for its services to be most effective in increasing rents, lessors must accept the pricing at least 80% of the time,” according to the suit.

RealPage said that many housing providers prefer bottom-line pricing and revenue management software because they keep them in compliance with fair housing regulations. 

“Negotiating rent opens up the possibility of providing different renters with different pricing for the same housing unit, which can put housing providers squarely in violation of federal Fair Housing laws,” RealPage said in a statement emailed to Multifamily Dive.

Since the pandemic, rent has dramatically increased around the country before slowing in the last couple of months. In May, Realtor.com reported that rents jumped 26.6% since 2019.

Given that trend, there could be more legal action against apartment owners and managers in the future, according to New York City-based attorney Carol Sigmond, a partner in the construction and litigation practice groups at Greenspoon Marder LLC.

“I think there is going to be a lot of these cases because I think rents have gone up dramatically, exceeding the inflation cycle,” she said.

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