DALLAS—Having already declared 2014 to be the “Year of theApartment,” locally based Axiometrics now says thesector has gone one better, by posting annualized effective rentgrowth not seen in more than two years. It's against thisbackdrop of continued strength, as well as challenges, that themultifamily industry will convene next month in Los Angeles for theannual RealShare Apartments conference, scheduled forOct. 15 and 16.

|

Rent growth nationwide was 4.1% in August, thefirst time the annualized rate broke the 4% barrier since May 2012,Axiometrics says. Although rent growth is not at what the researchfirm calls “the heady 5% levels of mid-2011,” the nationalapartment market is now “four years into the sector's recovery fromthe Great Recession, and there hasn't been any notable decelerationin rent growth.”

|

In fact, says Axiometrics, August's national growth is only onebasis point lower than the figure for May '12, which was alsorounded to 4.1%. The last time effective rent growth could berounded above that mark was in October '11, when it reached4.4%.

|

The good news doesn't stop there. Axiometrics says year-to-dateeffective rent growth reached 5.5% in August, up 40 bps from Julyand 35 bps ahead of the 5.2% recorded in August of '11, the nextstrongest post-recession year.

|

“YTD rent growth has now surpassed the previous high point forany month of the recovery,” according to Axiometrics. Furthermore,August marked the sixth consecutive month in which the current yearhas been considered the strongest one for annualized effective rentgrowth during the recovery period.

|

Whether '14 ends up as the strongest post-recession year overallwill depend on fourth-quarter performance, notes Axiometrics. Thefirm predicts that the rent growth rate will subside slightlyduring the last part of the year, but not below the mid-3% range onan annualized, monthly basis.

|

Occupancy, too, showed renewed strength in August, rising 22 bpsto 95.2% after three months at 95.0% flat. It marks the fourthconsecutive month of apartment occupancy above95%.

|

The high occupancy is “even more phenomenal,” Axiometrics says,when the volume of new supply being delivered nationwide is takeninto account. “The continued high occupancy is likely one reasonlandlords believe they can push rents higher,” the firm says.

|

In fact, the nationwide occupancy rate posted last month was thehighest since Axiometrics began reporting monthly in April 2008,“and this increase continues to demonstrate we aren't one bitconcerned about the national market, despite all the newsupply. With continued job growth propelling the apartmentmarket and helping to fill new (and even existing) units, we expectthe apartment market will continue to post positive and encouragingresults.”

|

The top two metro areas for growth in rents, occupancy andrevenue growth are both in Northern California. Oakland topped thelist with 11.2% annual effective rent growth, an occupancy rate of96.8% and Y-O-Y revenue growth of 11.3%. To Oakland's south,San Jose came in second with rent growth of 10.2%, occupancy of96.8% and revenue growth of 10.8%. The Bay Area's largestmetropolis, San Francisco, came in sixth in Axiometrics'ranking.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.