Northeast Region Tops U.S. Norm for Pandemic-Era Revenue Growth
Since the start of the COVID-19 pandemic, apartment markets in the Northeast region saw revenues increase above the national average, trailing only the South region as of 2nd quarter 2022.
It goes without saying that the pandemic has had a tremendous impact on the nation’s multifamily market. One way to look at performance is to study the changes in revenue per occupied square foot, one of the metrics available in RealPage’s lease transaction data set which is comprised of more than 11 million individual apartment leases. This particular metric focuses on rent roll but does not include amenities or concessions, so it provides a nice apples-to-apples comparison of revenue performance across regions and markets.
When looking at revenue change by region since the beginning of the pandemic, the South saw revenues increase the most through 2Q22, surpassing the Northeast at the beginning of the year. Still, the Northeast led in revenue growth up until that point, coming out of the gates hot during 2020 and surpassing the three other national regions by a wide margin. The Northeast held the lead through the end of 2021, ending the year at a nearly 7% gain in revenue per occupied square foot since the start of the pandemic.
Meanwhile, the slow-and-steady Midwest performed quite closely to the South during the early months of the pandemic, with revenue growth even surpassing the South region from mid-2020 to mid-2021. The West was the only region to see a significant decline in revenue, which lasted from the start of the pandemic until around mid-2021.
Overall, the Northeast region has seen nearly a 12.4% increase in revenue per occupied square foot since the onset of the pandemic, trailing the South region (13.8%) but landing above the national norm of 12%.
Turning to look at yearly revenue change by region, the Northeast again really outperformed throughout 2020 with a net gain of nearly eight cents per occupied square foot, while none of the other regions achieved any meaningful gains over that period. In fact, in the West region, there was a slight decline of about three cents per occupied square foot during the year.
Revenue grew across each of the four regions during 2021, with the West regaining ground and seeing significant acceleration, especially during the second half of the year. Both the West and the South saw revenue increases of about ten cents per square foot during 2021, while growth in the Northeast tapered and performed more closely to the Midwest during the calendar year with each of those two regions achieving revenue growth of about five cents per square foot.
The first half of 2022 saw an uptick in revenue growth across the board. Revenue per square foot in the Northeast increased eleven cents per foot during the first six months of the 2022, with the West region achieving a slight advantage ($0.12) and the South region ($0.09) following closely behind. By comparison, the increase in the Midwest landed at about half that amount ($0.06).
Overall, the Northeast region added nearly a full quarter ($0.24) of revenue per occupied square foot since the onset of the COVIED-19 pandemic, surpassing the second-place West region ($0.20) and well outperforming the national average ($0.18). Stated another way, while the South region saw the largest percentage gain in revenue since the start of the pandemic, the Northeast saw the largest dollar gain in revenue per square foot.
Since the Northeast region took the lead in COVID-era dollar revenue gain, it’s important to examine the performance in some of the larger investment markets in the region. Looking at total accumulated revenue gain by year, New York really dominates, with about 40 cents of additional net revenue per occupied square foot added since the pandemic. Despite significant declines throughout 2020, revenue performance in New York returned to positive territory in 2021 then skyrocketed in the first half of 2022, adding about 42 cents per square foot during those six months alone.
Nearby Newark/New Jersey saw flat performance through 2020, with solid gains during 2021 of about ten cents per square foot. That was by far the strongest revenue performance among large markets regionally as the relatively more affordable New Jersey market likely siphoned off apartment demand from its pricier neighbor across the Hudson River. Revenue change in New Jersey then followed with a gain of nearly 15 cents per square foot in the first half of 2022, landing at a cumulative gain of about $0.23 since the pandemic’s start.
Philadelphia far outperformed its Northeast counterparts coming out of the gates in 2020 with a gain of about seven cents per square foot during the year. Revenue performance in Philly then remained relatively consistent through 2021 ($0.05) and through the first half of 2022 ($0.06), with a cumulative gain of almost 20 cents per square foot over the period.
Boston followed a somewhat similar trajectory to New York through 2021 but saw much milder revenue growth during the first half of 2022, landing at a cumulative net revenue gain of just under 15 cents per occupied square foot since the start of the pandemic. Still, Boston’s revenue performance during the first six months of the 2022 ($0.15) landed in line with Newark/New Jersey as the second-best performance regionally.
Stay tuned for a closer look at market-level revenue growth performance across the other U.S. regions.