Effective rents for new leases in the 100 largest U.S. apartment markets
increased 1.9 percent during the second quarter, according to MPF
Research, an industry-leading market intelligence division of RealPage,
Inc. (NASDAQ: RP).
Quarterly apartment rent growth reached a 14-year high, producing
numbers that haven't been seen since late 2000.
The annual effective rent growth pace, as of the second quarter, came in
at 3.5 percent, trending upward from 3.2 percent in the first quarter of
2014 and 2.9 percent in the fourth quarter of 2013. Monthly rents across
the nation now average $1,153.
MPF Research analysts highlight the nation's latest apartment rent
growth statistics, as well as other key performance indicators for
rental housing in a discussion found at www.realpage.com/MPFQ2-2014-Report.
"Apartment owners and operators continue to have strong pricing power
right now," said MPF Research vice president Greg Willett. "Sizable rent
hikes are occurring, especially in middle-market to bottom-tier
properties, reflecting the especially tight occupancy rates seen for
those units. If there's a surprise in recent results, it's that
significant rent growth is also being generated at the very top of the
apartment product spectrum. Even in projects finished just a year or so
ago, higher rents are being realized when leases turn over, despite the
fact that there's competition from additional brand new developments
just entering the market."
Apartment occupancy across the nation's 100 largest markets registered
at 95.6 percent as of the second quarter. Occupancy improved from 95.0
percent as of the first quarter, with most of that increase simply
reflecting that there's a normal seasonal bump when leasing activity
accelerates during the warmer weather months. More telling is that the
second quarter 2014 occupancy rate moved slightly ahead of the second
quarter 2013 figure of 95.3 percent.
Two storylines are contributing to those strong occupancy results,
according to Willett. "While the existing inventory has been very full
in most locations for several years, metros that were economic recovery
laggards are now realizing strong apartment demand. Thus, the occupancy
numbers are improving rapidly in spots like Atlanta, Jacksonville,
Sacramento and Riverside. Even Las Vegas, which has one of the biggest
holes in performance to fill anywhere across the country, is moving
notably in the right direction."
Strong leasing activity at new completions is also shaping the occupancy
figures, Willett reports. "Units at brand new properties are being
leased about as quickly as they can be delivered in most cases. Thus,
new supply in lease-up isn't dampening overall occupancy to the degree
that is typical."
Demand for apartments across the 100 biggest markets nationally came in
at 129,162 units during the second quarter, more than doubling the
completion volume of 55,561 units. For the 12-month period ending in
June, demand was seen for 219,812 units, compared to the new supply
tally of 203,912 units.
Ongoing apartment construction at the end of the second quarter stood at
383,186 units in the top 100 markets. Construction starts have been
roughly equal to completions during recent quarters, thus ongoing
construction figures have been holding between 350,000 and 400,000 units
for a year and a half.
Delving a bit further into the impressive quarterly rent growth numbers,
effective rents for new leases climbed 4.4 percent in San Jose and 3.0
percent to 3.7 percent across Denver-Boulder, San Francisco, Chicago and
Oakland. A long list of metros saw pricing jump 2.1 percent to 2.8
percent for the quarter, with the group including Atlanta, Boston,
Nashville, Charlotte, Fort Worth, Portland, Dallas, Houston, Providence
and Los Angeles.
In metros across the Midwest and Northeast, the extreme winter weather
sharply curtailed rent growth. But most of those metros, such as Chicago
and Boston, saw big rent comebacks and notable price increases as the
Quarterly Rent Growth Leaders
Annual Rent Growth Leaders
Year-Ending Q2 2014
Annual rent growth leaders continue to feature concentrations of markets
across the Pacific Northwest, Texas and Florida. Effective rents for new
leases have climbed 9.4 percent during the past year in Oakland, 8.9
percent in San Jose, 8.4 percent in Denver-Boulder, and 7.4 percent in
Portland. Metros with effective rents for new leases up 5.0 percent to
5.6 percent yearly include Houston, Atlanta, Seattle-Tacoma, Sacramento,
San Francisco and Miami. Rents have jumped 4.0 percent to 4.8 percent
during the past year across Nashville, Fort Lauderdale, West Palm Beach,
Austin and Fort Worth.
Look for the apartment market's performance to cool a bit right at the
end of 2014, according to MPF Research. "Reflecting normal seasonality,
during the fourth quarter, there's a tendency to give back part of the
gains realized earlier," Willett said. "We'll be especially vulnerable
to that pattern this year, given the large block of product scheduled
for completion right at the end of the year. However, the performance
seen during the first half of 2014 has been so strong that the market is
now on track to realize revenue growth that's well above the level that
generally was anticipated coming into the year."
RealPage, Inc. is a leading provider of comprehensive property
management software solutions for the multifamily, commercial,
single-family and vacation rental housing industries. These solutions
help property owners increase efficiency, decrease expenses, enhance the
resident experience and generate more revenue. Using its innovative SaaS
platform, RealPage's on-demand software enables easy system integration
and streamlines online property management. Its product line covers the
full spectrum of property management solutions, including leasing,
accounting, revenue management, marketing solutions, resident services,
renter insurance, utility management, spend management and apartment
market research. Founded in 1998 and headquartered in Carrollton, Texas,
RealPage currently serves over 9,200 clients worldwide from offices in
North America, Europe and Asia. For more information about the company,
[ Back To NFVZone's Homepage ]