Axiometrics Inc., the leading provider of apartment data and research, reports that annual effective rent growth for apartments in March — at a rate of 3.22% — was the lowest it has been in the past 31 months.
However, while effective rent growth was weaker than it has been in recent months, the occupancy rate continued to strengthen, reaching a national average of 94.37% in March. Thirty-eight of the top 88 metropolitan areas generated occupancy rates above 95.0%.
“Class A properties have been a drag on the national rent growth numbers over the past several months,” said Ron Johnsey, founder and president of Axiometrics. “Annual effective rent growth for Class A units slowed to 3.1% in March and their annual occupancy growth was slightly negative. We expect Class A assets to continue to underperform for rent growth relative to the other classes for two income-related reasons. First, Class A residents with the highest income levels will be prime targets for developers seeking to fill new units, and second, those with lower income levels will increasingly face affordability issues and may seek to move down in class or push for lower rents at lease renewal.”
Effective Rent Growth and Occupancy
One year ago in March 2012, the annual effective rent growth rate was 4.05%. It has now slowed in ten of the last 11 months, and the March 2013 growth rate of 3.22% was the lowest it has been since measuring 2.88% in August 2010. Class B properties grew effective rents at a rate of 3.3%, while Class C grew at 4.0%.
Occupancy numbers continued to strengthen during March, especially as conditions tightened for Class C properties. While occupancy at Class A properties actually declined slightly from a year ago (from 95.2% in March 2012 to 95.0% this March), Class C properties posted robust occupancy growth, increasing from 92.2% in March 2012 to 93.0% in March 2013. Class B properties increased occupancy modestly over the past year, growing from 94.6% in March 2012 to 94.8% this March.
Sixteen of the top 88 areas saw annual effective rent growth greater than 5.0% in March, including Oakland (7.6%), San Francisco (6.2%), Houston (6.2%), Denver (6.1%), San Jose (5.5%), and Seattle (5.2%). Those underperforming the national average include Las Vegas (0.9%), Washington, DC (1.0%), Boston (2.4%), Los Angeles (2.9%), Orlando (2.9%), Raleigh (3.1%), and Atlanta (3.1%).
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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