Short supply, rising demand, improving fundamentals—including some anticipated job growth—and a big jump in the number of Echo Boomers entering the rental housing market are all adding up to one thing: Apartment developers are itching to get back into the game.
“Everything you need for ripe market conditions is occurring,” says Greg Willett, VP of research and analysis at Carrollton, TX-based MPF Research. “Certainly, there’s some strong recovery in fundamentals.”
US apartment occupancy increased to 93.6% in the first quarter of 2011 from 91.8% in late 2009. “That’s good, solid recovery reflecting the demand that’s emerged over the past year,” Willett says. “Particularly, the demand has been strong at the top of the market, where occupancy is 94% to 95%, and that’s really setting the stage for development.”
Willett notes that overall annual rent growth in the 12 months ending in March 2011 was 3.3%, with the top-tier properties performing slightly better. Landlords, he points out, are being aggressive on price positioning. “They’re not trying to attract a lot of new residents because they’re pretty much full, so it’s all about getting the rents up this year in the top half of the marketplace,” he says, adding that MPF is anticipating 5% to 6% revenue growth this year and next...
...To read the rest of the story, go to the May 2011 issue of Real Estate Forum.
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