DALLAS–According to the latest report put out by RealPage MPF Research Division, effective rents for new leases in the 100 largest US apartment markets has increased by 1.9% in the second quarter. Quarterly apartment rent growth has reached a 14-year high.
For Q2, the annual effective rent growth pace came in at 3.5%; an upward trend from 3.2% in the first quarter and 2.9% in the fourth quarter of 2013. According to the report, monthly rents now average $1,153, across the nation.
“Apartment owners and operators continue to have strong pricing power right now,” says MPF Research VP 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.”
In the top 100 markets studied, apartment occupancy rose just slightly to 95.6% during the second quarter compared to 95% the quarter before. While this number is not abnormal considering the usual seasonal bump, the report points out that this number is slightly ahead of last year’s 95.3%.
“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,” Willett says. “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.”
Demand for apartments more than doubled the completion volume; with 129,162 units being absorbed while 55,561 units entered the market.
“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,” Willett says. “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.”
RealPage Inc. is located in Carrollton, TX. The company provides property management software solutions for the multifamily, commercial, single-family and vacation rental housing markets.