Baltimore Makes Notable Progress
Baltimore made the short list of apartment markets that have seen a big improvement during the unprecedented months of the COVID-19 health crisis.
The metro saw one of the most improved occupancy rates in the nation in the last year, as occupancy improved 90 basis points (bps) to stand at 95.8%. Occupancy here is only a few ticks ahead of the national norm (95.5%), but even that gap is significant, given the market has run behind the U.S. norm by an average of about 60 bps point over the past four years.
Inspiring rising occupancy, demand in Baltimore far outpaced new supply in 2020. Baltimore absorbed nearly 4,900 units in the calendar year, while just under 3,400 units were completed. Among the nation’s largest 50 apartment markets, Baltimore was one of only eight that saw demand top supply by more than 1,000 units in 2020.
Meanwhile, the volume of apartments under construction has trended downward after hitting a recent high in late 2016. Less than 3,000 units were under way at the end of 2020, well below the market’s five-year average.
Over the next year, about 1,500 units are expected to complete in Baltimore. As supply should remain limited over the next several quarters, occupancy should also maintain its healthy rate through the end of 2021.
With demand and occupancy on solid ground, rent growth in Baltimore improved in 2020 as well. Though operators in the Maryland market did turn to annual effective asking rent cuts in May and June, price positioning here rebounded more quickly than in the nation as a whole. In December, Baltimore saw annual rent growth of 3.3%, one of the best rates among the nation’s 50 largest apartment markets. Even more impressive, rent growth is now ahead of price increases from February (2.2%), before the initial U.S. outbreak of COVID-19.
As in most markets in the U.S., Baltimore hasn’t yet recovered from the steep job cuts seen in March and April. As of November, the market had roughly 49,000 fewer total jobs than it did in February.
Employment in Baltimore is down in every sector, most notably in Information, Leisure and Hospitality and Government. Only one sector has had growth in the last year. Mining, Logging and Construction grew by about 5.4% in the 12 months ending in November, according to the Bureau of Labor Statistics.
For more on the metros that have shown resilience throughout the COVID-19 pandemic, watch the recent webcast Up Close and Local: New and Improved Markets.