SOURCE: Axiometrics Inc.

Axiometrics Inc.

January 21, 2014 11:15 ET

Axiometrics Reports Apartment Market Ends 2013 With Slowing but Still Solid Rent Growth; 2014 to Remain Steady Though New Supply May Impact Upper End of Market Late

DALLAS, TX--(Marketwired - January 21, 2014) -  Axiometrics Inc., the leading provider of apartment data and research, reported today that annual effective rent growth maintained its two-year moderation trend in December, with rent growth measuring 2.74%. National occupancy declined slightly to 94.2%. While lower than in recent months, these rates are still above their long-term historical averages, which are 2.15% and 94.0%, respectively.

For 2014, Axiometrics forecasts effective rent growth at the national level to reach 2.70%. Occupancy is expected to remain near the current 94.2% early in 2014, but will likely decelerate late in the year as new supply continues to increase.

"Despite the slowing national trend, many market areas continue to generate rent growth above 3.5%," said Ron Johnsey, president of Axiometrics. "The apartment market is still strong by historical standards and we expect that trend to continue in 2014 as effective rent growth remains steady, rather than spectacular. In the second half of the year there is some concern about how ever increasing supply will impact the market."

Effective Rent Growth and Occupancy
Axiometrics' latest data indicates that sequential effective rent growth from November to December measured -0.28% nationally, representing a slight uptick from the previous month though similar to the -0.33% rate reported in December 2012. The December annual effective rent growth rate of 2.74% was an increase of 5 basis points (bps) from November's rate. Though small, this increase in effective rent growth is the first since June 2014.

In December, 18 of the top 90 metropolitan statistical areas (MSAs) generated rent growth of more than 5.0%. Eight of those MSAs are located in Florida and California. Naples, FL was once again the top performer with rent growth of 13.47%. Other selected MSAs with growth above 5.0% included:

  • San Jose, CA (8.76%)
  • Boulder, CO (7.3%)
  • Denver, CO (7.08%)
  • Oakland, CA (6.84%)
  • San Francisco, CA (6.52%)
  • Atlanta, GA (5.49%)
  • Austin, TX (5.48%)

Washington, DC, New York and Philadelphia continue to rank among the lowest tier for annual effective rent growth, measuring -1.73%, -1.29% and -1.06%, respectively.

The December occupancy rate of 94.2% was down 24 bps from November but up 4 bps from December 2012. Overall, the national occupancy rate has remained above 94.0% since April 2012.

Currently, 29 of the top 90 MSAs have an average occupancy rate greater than 95.0%. The highest occupied metros are:

  • Naples, FL (97.5%)
  • Lansing, MI (97.0%)
  • Santa Rosa, CA (96.9%)
  • North Port, FL (96.4%)
  • Providence, RI (96.3%)
  • Nassau, NY (96.3%)
  • New York, NY (96.2%)
  • Minneapolis, MN (96.0%)
  • Nashville, TN (95.8%)
  • Miami, FL (95.8%)

2014 Outlook
Axiometrics forecasts rent at the national level to reach 2.70% in 2014, representing a very slight dip from 2013's rent growth rate of 2.74%. The MSAs that outperformed in 2013, according to Axiometrics, are expected to maintain the lead in 2014 but should slightly moderate as the year progresses.

Axiometrics also forecasts occupancy to continue just about at its current level early in 2014, but that it will decelerate late in the year and early in 2015 as the market deals with increasing levels of new supply. However, Axiometrics anticipates new supply to peak in 2014 then decline, the result of increased construction costs, slowing effective rent growth (especially among Class A product) and the impending concern about oversupply in the urban core of top markets. The following table identifies 2013 supply levels for top MSAs, as well as a forecast for 2014 deliveries:

 
Identified Supply for Top MSAs for 2013 Delivery and 2014 Outlook
  MSA 2013
Deliveries
2014
Deliveries
Difference % MF Avg
Permitting
'04-'07
To Nov '13*
  Dallas, TX 9,938 12,459 2,521 171%
  Houston, TX 7,774 14,908 7,134 111%
  Washington, DC 7,404 16,741 9,337 126%
  Austin, TX 5,922 9,486 3,564 194%
  Seattle, WA 5,661 9,082 3,421 130%
  San Antonio, TX 5,310 3,156 -2,154 40%
  New York, NY 5,243 11,753 6,510 83%
  Chicago, IL 4,782 4,250 -532 29%
  Denver, CO 4,188 9,138 4,950 187%
  San Jose, CA 3,914 4,100 186 171%
*Multifamily (5+ units) trailing 12-month permitting (November 2013 / Average of 2004-2007)
Identified Supply Data as of January 2014
Source: Axiometrics Inc., Census Bureau
 

About Axiometrics

Axiometrics is the only multifamily research provider to survey every property in its database at the floor plan level every month. Every property. Every month. Only Axiometrics. Learn more at www.axiometrics.com or by calling 214-953-2242.

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