SOURCE: Axiometrics Inc.

Axiometrics Inc.

April 01, 2015 10:00 ET

Apartment Rents Soar in First Quarter

Annual Effective Rent Growth Highest Since 3Q11

DALLAS, TX--(Marketwired - April 01, 2015) - Annual effective rent growth for apartments was the highest it has been in 3-1/2 years in the first quarter of 2015, according to early release numbers from Axiometrics, the leader in apartment market research.

Annual effective rent growth of 4.9% during the first quarter of 2015 represented a 21-basis-point (bps) increase over the 4.7% recorded in the fourth quarter of 2014. The figure is the highest since the third quarter of 2011, when rent growth was also 4.9%, and is the highest first-quarter rate since the 5.8% of 2006. Annual effective rent growth was 2.9% in the first quarter of 2014.

"The rapid growth of 2014 has continued into 2015, and is the result of many factors," said Stephanie McCleskey, Axiometrics Vice President of Research. "We are seeing solid job growth, single-family homes are becoming less affordable and, of course, the trend of people choosing to rent instead of buy continues."

The average renter paid $1,114 per month in the first quarter, $6 more than in the fourth quarter of 2014, a quarter-to-quarter effective rent growth rate of 0.5%, which matches the same rate recorded in the first quarter of 2014.

Occupancy was 94.6% in the first quarter, according to the early release metrics, a slight decrease from the 94.7% in the fourth quarter of 2014, but an increase from the 94.3% of the first quarter of 2014.

"Occupancy has declined slightly from the fourth quarter to the first quarter in three of the past four years," McCleskey said. "It's the normal trend for this time of year. If the occupancy rate does not rise in the second and third quarters, we will know moderation is occurring as a large amount of new supply continues to come to market."

Axiometrics identified 63,846 new apartment units to be delivered nationwide during the first quarter of 2015, some 22.8% of the total 280,406 units expected to come to market this year. Last year, 217,555 units were delivered, according to Axiometrics' pipeline data.

Northern California Still Tops Chart
Among metros, Northern California again dominated the annual effective rent growth list of the top 50 apartment markets, determined by number of units. As was the case in the fourth quarter, that region had four of the top five metros on the chart. The only change among the top five was that No. 2 San Francisco and No. 4 San Jose swapped places from the fourth quarter.

The only other changes in the top 10 were No. 6 Portland OR, trading spots with No. 7 West Palm Beach, and Seattle rising from No. 15 to No. 9, displacing Phoenix, which fell to No. 11.

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 first quarter of 2015 were:

MSA/Metro Division Annual Effective Rent Growth
Oakland-Fremont-Hayward, CA 14.9%
San Francisco-San Mateo-Redwood City, CA 12.6%
Denver-Aurora, CO 11.9%
San Jose-Sunnyvale-Santa Clara, CA 11.3%
Sacramento-Arden-Arcade-Roseville, CA 8.4%
Portland-Vancouver-Beaverton, OR-WA 8.2%
West Palm Beach-Boca Raton-Boynton Beach, FL 8.1%
Atlanta-Sandy Springs-Marietta, GA 7.5%
Seattle-Bellevue-Everett, WA 6.8%
Fort Lauderdale-Pompano Beach-Deerfield Beach, FL 6.7%
Phoenix-Mesa-Scottsdale, AZ 6.5%
Fort Worth-Arlington, TX 6.4%
Charleston-North Charleston, SC 6.0%
Nashville-Davidson-Murfreesboro, TN 5.9%
Orlando, FL 5.9%
Los Angeles-Long Beach-Glendale, CA 5.8%
Riverside-San Bernardino-Ontario, CA 5.5%
San Diego-Carlsbad-San Marcos, CA 5.5%
Dallas-Plano-Irving, TX 5.3%
Las Vegas-Paradise, NV 5.3%
Santa Ana-Anaheim-Irvine, CA 5.2%
Tampa-Saint Petersburg-Clearwater, FL 5.1%
New York-Wayne-White Plains, NY-NJ 4.8%
Houston-Baytown-Sugar Land, TX 4.6%
Miami-Miami Beach-Kendall, FL 4.6%

One sign of strengthening in the national apartment market is that 36 metros in Axiometrics' top 50 had positive quarterly effective rent growth in the first quarter, compared to 14 in the fourth quarter of 2014. The top 25 markets by quarterly effective rent growth were:

MSA/Metro Division Quarterly Effective Rent Growth
Oakland-Fremont-Hayward, CA 3.1%
Seattle-Bellevue-Everett, WA 2.1%
San Francisco-San Mateo-Redwood City, CA 2.0%
San Jose-Sunnyvale-Santa Clara, CA 1.9%
Fort Lauderdale-Pompano Beach-Deerfield Beach, FL 1.6%
Phoenix-Mesa-Scottsdale, AZ 1.5%
Miami-Miami Beach-Kendall, FL 1.4%
Portland-Vancouver-Beaverton, OR-WA 1.4%
Riverside-San Bernardino-Ontario, CA 1.2%
Denver-Aurora, CO 1.1%
Fort Worth-Arlington, TX 1.1%
Las Vegas-Paradise, NV 1.0%
Tampa-Saint Petersburg-Clearwater, FL 0.9%
West Palm Beach-Boca Raton-Boynton Beach, FL 0.8%
Nashville-Davidson-Murfreesboro, TN 0.8%
Saint Louis, MO-IL 0.8%
Los Angeles-Long Beach-Glendale, CA 0.8%
Charleston-North Charleston, SC 0.7%
Chicago-Naperville-Joliet, IL 0.7%
Orlando, FL 0.7%
Bethesda-Frederick-Gaithersburg, MD 0.6%
Houston-Baytown-Sugar Land, TX 0.5%
Dallas-Plano-Irving, TX 0.5%
Sacramento-Arden-Arcade-Roseville, CA 0.5%
Minneapolis-Saint Paul-Bloomington, MN-WI 0.5%

The top 25 metro areas by occupancy on a quarterly basis, among the top 50, in the first quarter of 2015 were:

MSA/Metro Division 1Q15 Occupancy Occupancy Change
New York-Wayne-White Plains, NY-NJ 97.0% -0.3%
Oakland-Fremont-Hayward, CA 96.6% 0.1%
Miami-Miami Beach-Kendall, FL 96.4% 0.6%
San Francisco-San Mateo-Redwood City, CA 96.4% -0.2%
San Jose-Sunnyvale-Santa Clara, CA 96.3% 0.1%
Portland-Vancouver-Beaverton, OR-WA 96.1% 0.2%
Minneapolis-Saint Paul-Bloomington, MN-WI 96.0% 0.0%
West Palm Beach-Boca Raton-Boynton Beach, FL 95.9% 0.1%
Los Angeles-Long Beach-Glendale, CA 95.9% -0.2%
San Diego-Carlsbad-San Marcos, CA 95.9% -0.3%
Edison, NJ 95.8% -0.2%
Santa Ana-Anaheim-Irvine, CA 95.7% -0.5%
Sacramento-Arden-Arcade-Roseville, CA 95.7% -0.3%
Hartford-West Hartford-East Hartford, CT 95.6% -0.5%
Nassau-Suffolk, NY 95.6% -0.5%
Nashville-Davidson-Murfreesboro, TN 95.6% -0.1%
Seattle-Bellevue-Everett, WA 95.5% 0.4%
Denver-Aurora, CO 95.5% -0.3%
Fort Lauderdale-Pompano Beach-Deerfield Beach, FL 95.5% 0.2%
Riverside-San Bernardino-Ontario, CA 95.5% -0.3%
Boston-Cambridge-Quincy, MA-NH 95.4% -0.2%
Orlando, FL 95.3% -0.1%
Columbus, OH 95.2% 0.0%
Philadelphia, PA 95.1% -0.3%
Chicago-Naperville-Joliet, IL 95.0% 0.0%

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. To learn more, visit www.axiometrics.com, follow @Axiometrics or on LinkedIn, or call 214-953-2242.

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