SOURCE: Axiometrics Inc.

Axiometrics Inc.

December 30, 2014 13:15 ET

Apartment Market Generates Strongest Fourth Quarter Since 2005

Annual Effective Rent Growth 4.5%, Early Numbers Show

DALLAS, TX--(Marketwired - December 30, 2014) - The U.S. apartment market is ending 2014 with the strongest fourth-quarter annual effective rent growth in nine years, according to early release numbers from Axiometrics, the leader in apartment research and data.

Annual effective rent growth in the fourth quarter of 2014 was 4.5%, according to the preliminary figures, a 47-basis-point (bps) increase from the 4.1% recorded in the third quarter and a 173-bps rise from the 2.8% of the fourth quarter of 2013. This quarter's rate represents the strongest quarter overall since measuring 4.9% in 2011's third quarter, and the highest fourth-quarter figure since the 5.8% of 2005.

"The apartment market has outperformed expectations in 2014," Axiometrics Vice President of Research Stephanie McCleskey said. "Rents have remained strong, and comparing it to the weakness of late 2013, we see a phenomenal year-over-year gain."

Though the annual rent-growth rate increased significantly, the average fourth-quarter rent was down from the third quarter on a quarterly basis. Average effective rent for an apartment unit was $1,176 in the fourth quarter, compared to $1,182 in the third quarter, a quarter-over-quarter effective rent growth rate of -0.5%.

"Rents typically decrease in the fourth quarter, which is a tough time for rentals," McCleskey said. "The good news is that all individual quarters in 2014 had quarter-over-quarter effective rent growth above the corresponding 2013 quarter."

QUARTERLY EFFECTIVE RENT GROWTH
Quarter 2013 2014
First 0.4% 0.5%
Second 2.1% 2.7%
Third 1.2% 1.6%
Fourth -0.9% -0.5%

Source: Axiometrics Inc.

As usually happens in fourth quarters, the national occupancy rate decreased 28 bps to 94.8%, which is still the highest fourth-quarter occupancy since the 95.8% of 2000.

Bay Area, Southeast Pace Metros

As has been the case all year long, the San Francisco Bay Area, Florida and the Southwest in general have had the strongest apartment markets. Three metros -- Oakland, San Jose and Denver -- had fourth-quarter annual effective rent growth of more than 10%.

Four of the top five markets ranked among Axiometrics' Top 50 were in Northern California, while four more of the top 14 were in Florida and two others, Atlanta and Charleston, were in the Southeast. Of the top 14, only Denver; Portland, OR; and Phoenix were outside those geographic areas.

The top 25 Metropolitan Statistical Areas or Metropolitan Divisions -- among Axiometrics' top 50 markets with the most apartments -- by annual effective rent growth for the fourth quarter of 2014 were:

MSA/Metro Division Annual 4Q14
Effective
Rent Growth
Oakland-Fremont-Hayward, CA 12.6%
San Jose-Sunnyvale-Santa Clara, CA 10.9%
Denver-Aurora, CO 10.6%
San Francisco-San Mateo-Redwood City, CA 9.7%
Sacramento-Arden-Arcade-Roseville, CA 9.0%
West Palm Beach-Boca Raton-Boynton Beach, FL 8.7%
Portland-Vancouver-Beaverton, OR-WA 7.1%
Atlanta-Sandy Springs-Marietta, GA 7.0%
Fort Lauderdale-Pompano Beach-Deerfield Beach, FL 6.3%
Phoenix-Mesa-Scottsdale, AZ 6.2%
Charleston-North Charleston, SC 6.0%
Orlando, FL 5.8%
Miami-Miami Beach-Kendall, FL 5.8%
Fort Worth-Arlington, TX 5.7%
Seattle-Bellevue-Everett, WA 5.7%
Hartford-West Hartford-East Hartford, CT 5.7%
Las Vegas-Paradise, NV 5.7%
Los Angeles-Long Beach-Glendale, CA 5.5%
Riverside-San Bernardino-Ontario, CA 5.5%
Nashville-Davidson-Murfreesboro, TN 5.5%
Houston-Baytown-Sugar Land, TX 5.2%
San Diego-Carlsbad-San Marcos, CA 5.1%
Dallas-Plano-Irving, TX 4.8%
Tampa-Saint Petersburg-Clearwater, FL 4.7%
Charlotte-Gastonia-Concord, NC-SC 4.6%
   

Fourteen metros in Axiometrics top 50 had positive quarterly effective rent growth in the fourth quarter. The top 25 markets by quarterly effective rent growth were:

     
MSA/Metro Division Effective Rent 4th
Quarter
ERG
West Palm Beach-Boca Raton-Boynton Beach, FL $1,403 2.2%
San Francisco-San Mateo-Redwood City, CA $2,988 1.2%
Riverside-San Bernardino-Ontario, CA $1,292 1.0%
Phoenix-Mesa-Scottsdale, AZ $846 0.9%
Denver-Aurora, CO $1,237 0.6%
Fort Lauderdale-Pompano Beach-Deerfield Beach, FL $1,404 0.6%
Oakland-Fremont-Hayward, CA $2,066 0.5%
Santa Ana-Anaheim-Irvine, CA $1,849 0.4%
Los Angeles-Long Beach-Glendale, CA $2,021 0.4%
Las Vegas-Paradise, NV $818 0.3%
Salt Lake City, UT $929 0.3%
Portland-Vancouver-Beaverton, OR-WA $1,181 0.1%
San Diego-Carlsbad-San Marcos, CA $1,696 0.1%
Orlando, FL $1,000 0.0%
Sacramento-Arden-Arcade-Roseville, CA $1,150 -0.1%
Tampa-Saint Petersburg-Clearwater, FL $974 -0.1%
Oklahoma City, OK $753 -0.1%
Miami-Miami Beach-Kendall, FL $1,572 -0.2%
Atlanta-Sandy Springs-Marietta, GA $962 -0.2%
Dallas-Plano-Irving, TX $999 -0.2%
Nashville-Davidson-Murfreesboro, TN $994 -0.3%
Fort Worth-Arlington, TX $885 -0.3%
Saint Louis, MO-IL $866 -0.4%
New York-Wayne-White Plains, NY-NJ $3,442 -0.4%
Charlotte-Gastonia-Concord, NC-SC $916 -0.4%
     

The top 25 metro areas by occupancy on a quarterly basis, among the top 50, in the fourth quarter of 2014 were:

     
MSA/Metro Division 4Q14
Occupancy
 Occupancy
Change
New York-Wayne-White Plains, NY-NJ 97.3% 0.3%
Oakland-Fremont-Hayward, CA 96.6% -0.2%
San Francisco-San Mateo-Redwood City, CA 96.5% -0.2%
Santa Ana-Anaheim-Irvine, CA 96.4% -0.1%
San Jose-Sunnyvale-Santa Clara, CA 96.2% -0.5%
San Diego-Carlsbad-San Marcos, CA 96.2% -0.1%
Minneapolis-Saint Paul-Bloomington, MN-WI 96.1% -0.8%
Hartford-West Hartford-East Hartford, CT 96.1% -0.9%
Los Angeles-Long Beach-Glendale, CA 96.1% 0.0%
Sacramento-Arden-Arcade-Roseville, CA 96.0% 0.1%
Nassau-Suffolk, NY 96.0% -0.7%
Edison, NJ 96.0% -0.3%
Miami-Miami Beach-Kendall, FL 96.0% -0.4%
Portland-Vancouver-Beaverton, OR-WA 95.9% -0.1%
Denver-Aurora, CO 95.9% -0.4%
West Palm Beach-Boca Raton-Boynton Beach, FL 95.8% 0.1%
Riverside-San Bernardino-Ontario, CA 95.7% 0.6%
Nashville-Davidson-Murfreesboro, TN 95.6% -0.6%
Boston-Cambridge-Quincy, MA-NH 95.5% -0.4%
Philadelphia, PA 95.4% -0.4%
Orlando, FL 95.4% -0.1%
Fort Lauderdale-Pompano Beach-Deerfield Beach, FL 95.3% -0.3%
Columbus, OH 95.2% -0.5%
Seattle-Bellevue-Everett, WA 95.2% -0.6%
Salt Lake City, UT 95.2% -0.6%
     

About Axiometrics

Axiometrics improves property and portfolio performance for apartment investments. Confident investment decisions begin with reliable, timely information. No one has more accurate, detailed, and up-to-date research on the apartment and student housing markets. Learn more at www.axiometrics.com or by calling 214-953-2242.

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