Small Apartment Markets with Improved Occupancy

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Despite a year-to-date national decline of 20 basis points (bps), a handful of small apartment markets have logged notable occupancy growth thus far in calendar 2023. The standout performer in this group was Midland/Odessa, TX, where just a few years ago, occupancy was below the 90% mark, according to data from RealPage Market Analytics. By the end of 2022, occupancy had worked its way up to 92.3% and since then, the rate has climbed another 110 basis points. This was a staggering performance compared to what was seen across much of the nation. In fact, the U.S. overall suffered an average occupancy decline of 20 bps in the first five months of calendar 2023. Recent occupancy increases in Midland/Odessa have helped the market become a nationwide leader in revenue growth in the past year. However, annual occupancy growth in this market was better at 140 bps, meaning that the pace of increase has actually slowed in the Texas oil-dependent market. Every other market with occupancy growth thus far in calendar 2023 logged an annual decline as of May. In other words, while occupancy is down since May 2022 in those markets, the story actually started looking more positive in recent months. The biggest turnarounds occurred in Pensacola-Ferry Pass-Brent, FL and Mobile/Daphne, AL. These southeast coastal markets saw notable decline in the back half of 2022, but the bloodletting has eased and occupancy in both these areas is now well ahead of December 2022 rates.