A sudden shift in momentum in long-time underperformer Greensboro/Winston-Salem has the market near the top of the South region leaderboard for rent growth in mid-2017.
The Triad apartment market’s 5.2% annual increase was the fourth biggest among major markets in the South region. It ranked #11 among the top 50 markets nationally.
That recent increase, a decade high for the metro, stands in contrast to historical performances. Over the past decade, Greensboro/Winston Salem has topped the national average in only seven quarters, with rent performances averaging only 1.1% annually over that period.
While rents are increasing across the market, two segments have driven the recent acceleration. Annual rent growth topped 8% in Class A product, while operators in North Winston-Salem pushed rents 7.0% in 2nd quarter 2017.
Bolstering performance in mid-2017 has been unusually tight market conditions.
Unusually strong demand over much of the past two years has lifted occupancy in Greensboro/Winston-Salem to roughly 95% or higher in five of the past seven quarters. Those were among the metro’s best readings over the past decade. In 2017’s 2nd quarter specifically, occupancy measured 95.5%.
Those occupancy readings come even as supply volumes remain somewhat elevated by local standards. During the year-ending 2nd quarter 2017, existing inventory grew 2.1% – a pace that’s elevated for the market, but not aggressive. However, completions are expected to pick up in the coming year, with inventory expansion on track to surpass 3%.
With increased supply volumes, Greensboro/Winston-Salem will likely see some moderation in market fundamentals. Additionally, with slow employment growth for most of the post-recession recovery period, the metro’s apartment market lacks the drivers necessary for consistently strong demand. In turn, rent performances are likely to return to levels closer to the market’s decade average.