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Rising Rents Hit 47-Month High, June Occupancy Matches Record

Rising Rents Hit 47-Month High, June Occupancy Matches Record

The rental market set new records in June as the national annual effective rent growth rate reached 5.1%, a 47-month high for the national apartment market and continued a streak of 5.0%-plus rent growth that is the longest in at least six years, according to Axiometrics,.

  • Though effective rent growth was also 5.1% in April and February, the June rate was the highest when extended to two decimal points (5.11%), and is the highest rate since the 5.3% of July 2011.
  • Effective rent growth has reached at least 5.0% for five straight months, the longest such streak since Axiometrics started monthly reporting of annual apartment data in April 2009.

“Rent growth is just shy of the post-recession peak, and the June metrics reflect the continued strength of the apartment market,” said Stephanie McCleskey, Axiometrics vice president of research. “The demand for apartments is still strong, despite the record number of new units being delivered this year.”

  • June’s national annual effective rent growth rate was 9 basis points (bps) higher than May’s 5.0% and 143-bps above the 3.7% of June 2014.
  • National year-to-date (YTD) effective rent growth reached 4.7% in June. This was the third month that 2015 monthly YTD rent growth rates outperformed all post-recession counterparts.
  • YTD rent growth for apartment REITs was 7.3%, far surpassing the next-highest post-recession year.

Occupancy Rates Steady in June

The occupancy rate remained at 95.3% in June — though the latest rate was a 2-bps increase from May when extended to two decimal points (95.30% from 95.28%).

“Tight occupancy is why landlords can push rents higher,” McCleskey said. “Axiometrics considers a market or property essentially full at 95% occupancy, so there are just not that many apartments available. There’s a reason for all the new supply: The market is still playing catch-up for all the apartments not built during the recession.”

Top 17 Metros Relatively Steady

After some significant changes in May, the top 17 markets for effective rent growth were relatively steady in June.

  • Oakland stayed on top of the list, with 14.4% annual effective rent growth among Axiometrics’ top 50 apartment markets, as determined by number of units.
  • Portland, OR (13.6%) and Denver (10.9%) remained Nos. 2 and 3.
  • A few markets swapped places, such as No. 4 San Jose (10.4%) and No. 5 Sacramento (9.8%).
  • California continued to dominate the rent-growth chart with the help of strong job growth and less attainable and/or attractive single-family housing alternatives.
           
    Annual Effective Rent Growth  Occupancy Rate Revenue Growth
   
Rank MSA 14-Jun 15-Jun   14-Jun 15-Jun 14-Jun 15-Jun
1 Oakland, CA 9.6% 14.4%   96.8% 96.5% 9.9% 14.1%
2 Portland, OR 6.0% 13.6%   96.2% 97.1% 6.0% 14.6%
3 Denver, CO 8.6% 10.9%   96.1% 95.9% 9.0% 10.7%
4 San Jose, CA 9.1% 10.4%   97.0% 97.0% 9.3% 10.4%
5 Sacramento, CA 8.3% 9.8%   96.2% 95.9% 10.3% 9.4%
6 San Francisco, CA 6.7% 9.1%   96.5% 96.3% 7.4% 9.0%
7 Riverside, CA 4.3% 7.6%   95.2% 95.7% 4.9% 8.1%
8 Seattle, WA 7.0% 7.5%   96.6% 96.2% 7.3% 7.2%
9 Atlanta, GA 7.3% 7.3%   94.2% 94.8% 7.9% 7.9%
10 Phoenix, AZ 4.5% 7.1%   93.5% 94.5% 5.0% 8.0%
11 Nashville, TN 5.6% 6.8%   96.0% 96.0% 5.8% 6.7%
12 Las Vegas, NV 3.2% 6.7%   93.4% 94.5% 4.4% 7.8%
13 Dallas, TX 4.0% 6.4%   95.0% 95.6% 4.0% 7.0%
14 Orlando, FL 4.5% 6.3%   95.1% 95.7% 4.9% 6.9%
15 Fort Worth, TX 4.5% 6.2%   95.1% 95.9% 4.8% 7.0%
16 Fort Lauderdale, FL 5.0% 6.2%   95.7% 95.8% 5.6% 6.3%
17 Los Angeles, CA 4.3% 6.2%   95.8% 95.9% 5.1% 6.3%
  National 3.7% 5.1%   95.1% 95.4% 4.0% 5.4%
Selected Other Markets
3 Naples, FL 10.5% 11.9%   97.2% 96.5% 10.0% 11.2%
4 Cape Coral, FL 8.4% 11.0%   95.6% 96.4% 9.7% 11.8%
5 Santa Rosa, CA 11.3% 10.9%   97.3% 97.0% 11.5% 10.5%
9 Palm Bay, FL 4.9% 9.7%   94.8% 95.8% 5.5% 10.8%
10 Salinas, CA 4.3% 9.5%   97.5% 98.4% 5.6% 10.3%
 
*Rank is based on annual effective rent growth in June 2015 for Axiometrics’ Top 50 Markets. Selected other markets are based on Axiometrics’ Top 121 Markets. Axio tracks properties in more than 450 MSAs throughout the country.
 
Source: Axiometrics Inc.

 

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