Report Highlights Top and Bottom Performing Rental Markets

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Axiometrics Inc., the leading provider of apartment data and research, reported today that national annual effective rent growth, which has been moderating for most of the past two years, continued that trend in November, declining to a growth rate of 2.7%.

Likewise, occupancy declined from 94.9% to 94.5%.

However, data shows a silver lining. “Even with this ongoing slowdown in effective rent growth, it is important to note that the long-term average for rent growth since 1996 is 2.15%, so we are still well above that rate,” said Ron Johnsey, president of Axiometrics. “In addition, many markets are still generating rent growth above 3.5%, and the occupancy rate remains a half point higher than the long-term average of 94%. Thus, on a historical basis, it is still a very strong apartment market.”

Effective Rent Growth and Occupancy

Axiometrics’ latest data indicates that sequential effective rent growth from October to November measured -0.56% nationally. This decline was similar to the decline recorded during 2011, and as a whole, the fourth quarter this year is tracking close to the mild fourth quarter declines of 2010, 2011, and 2012, as opposed to the substantial decline seen in 2008.

Annual effective rent growth had remained unchanged from September to October but declined in November to 2.7%. As a result, annual growth has now been slowing for 18 out of the last 24 months. However, out of the top 88 metropolitan statistical areas (MSAs), 16 generated annual effective rent growth greater than 5% for the month.

Two Florida markets, Naples and North Port, ranked first and second this month for effective rent growth, 11.99% and 9.48%, respectively. Other notable MSAs with an annual growth rate greater than 5% included:

Boulder, CO (8.02%)
San Francisco, CA (7.7%)
Oakland, CA (7.29%)
Seattle, WA (5.62%)
Atlanta, GA (5.39%)
Austin, TX (5.02%)

Washington, DC continues to rank as one of the weakest MSAs with an annual growth rate of -1.5%. In addition, Philadelphia posted its third consecutive month of negative annual growth, measuring -0.36% for November. New York also turned negative for the first time this year with a growth rate of -0.62%.

During November, the national occupancy rate decreased to 94.5%, which was down 21 basis points from the rate in September, but up 16 basis points from the rate in November 2012. Still, the national occupancy rate remained near its high for the past 12 years, with 37 of the top 88 MSAs having an average occupancy rate greater than 95%. The highest occupied MSAs in November were:

Lansing, MI (97.3%)
Naples, FL (97%)
Santa Rosa, CA (96.8%)
Minneapolis, MN (96.6%)
New York, NY (96.5%)
Edison, NJ (96.5%)
North Port, FL (96.4%)
Providence, RI (96.3%)
Oakland, CA (96.1%)
Nassau, NY (96.1%)

Top and Bottom Markets

Axiometrics notes that certain MSAs continue to perform well as a result of strong job creation, lack of affordable alternatives, or both. “In the Bay area, for example, single-family homes are very unaffordable and there is little new supply, thus landlords have the power to continue pushing rents,” said Johnsey. “In Houston, job creation has been phenomenal, with nearly 200,000 jobs created in the last two years. Even with new starts, multifamily construction in Houston has had a difficult time keeping up with job growth and demand, which in turn has created a surge in rent growth.”

Axiometrics is the only multifamily research provider to survey every property in its database at the floor plan level every month. Every property. Every month. Only Axiometrics. Learn more at www.axiometrics.com or by calling 214-953-2242.

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