San Jose and New York rank as the nation’s rent growth leaders
(March 30, 2011)—U.S. apartment rents sustained momentum with significant gains during the first quarter of 2011, according to MPF Research, an industry leading market intelligence division of RealPage, Inc. (NASDAQ: RP). Analysis showed prices increasing another 1.1 percent in the quarter, taking the rise for the 12 months ending in March to 3.3 percent. A complete discussion of the findings is available at www.realpage.com/MPFQ1Report.
“Occupancy rates in the apartment sector have tightened enough to give owners and managers quite a bit of pricing power,” said Greg Willett, vice president of research at MPF Research. “Rent growth is proving especially strong in top-tier properties. With minimal new supply coming to market, competition for the best existing developments is very limited, and the highest-priced properties are not losing residents to home purchase at anywhere near the historical norm.”
MPF Research’s first quarter 2011 statistics showed U.S. apartment occupancy reaching 93.6 percent, up 0.1 percentage point on a quarterly basis and 0.8 percentage points annually.
“The number of 12-month apartment leases turning over in the first quarter was unusually large, reflecting that much of 2010’s demand was recorded just as the economy started to gain momentum at the beginning of the year,” Willett said. “New renters from a year ago were the last group to get in at bottom-of-the-cycle rents, so they were the ones most susceptible to sticker shock at lease renewal time. We’re seeing that most of the households with leases up for renewal in the first quarter continued renting apartments, rather than leasing rental condos or single-family homes or choosing to make housing purchases.”
Results seen during the first quarter set up the apartment market for a robust performance during the remainder of the year. MPF Research anticipates that rent growth in calendar 2011 will reach 5.1 percent.
Looking at the top-performing markets, San Jose, Calif., and New York registered the nation’s biggest apartment rent increases during the year-ending first quarter, with pricing jumping 7.8 percent in San Jose and 7.4 percent in New York. Rates were up 6.9 percent in Greenville, S.C., 6.8 percent in Miami, 6.3 percent in El Paso, Texas, and 6.2 percent in San Francisco. Other metros recording rent increases of at least 5 percent were Portland, Ore., at 5.7 percent, Oakland, Calif., at 5.4 percent, both Washington, D.C., and Baltimore at 5.3 percent, and both Minneapolis and Seattle at 5.1 percent.
“The Pacific Northwest metros and New York are living up to the high expectations for rent growth that many in the apartment sector had for them going into 2011,” Willett said. “If there are any surprises emerging in metro-level results, they’re coming in the Midwest and the Rust Belt, where rebounding manufacturing job growth is creating enough apartment demand to allow rents to rise faster than the national average.”
The MPF Research figures showed annual rent growth as of the first quarter at 4.6 percent in Detroit and in the range of 3.8 percent to 4.2 percent across Cleveland, Chicago, and Pittsburgh.
Las Vegas, Nev., was the only metro that recorded declining prices during the year-ending first quarter, with prices down 3 percent.
|Annual Rent Growth Leaders
First Quarter 2011
|1||San Jose, Calif.||7.8%|
|5||El Paso, Texas||6.3%|
|9 (tie)||Washington, D.C.||5.3%|
About MPF Research
A member of the RealPage family, MPF Research provides market intelligence and objective insights to the multifamily industry. The market intelligence offered by MPF Research is used in formulating and fine tuning business strategies in a variety of multifamily industry specialties, including investment, operations and development. For more information on MPF Research, call 877-284-4938 or visit www.mpfresearch.com.
Located in Carrollton, Texas, a suburb of Dallas, RealPage provides on-demand (also referred to as “Software-as-a-Service” or “SaaS”) products and services to apartment communities and single family rentals across the United States. Its six on-demand product lines include OneSite® property management systems that automate the leasing, renting, management, and accounting of conventional, affordable, tax credit, student living, and military housing properties; Level One® and CrossFire® that enable owners to originate, syndicate, manage and capture leads more effectively and at less overall cost; YieldStar® asset optimization systems that enable owners and managers to optimize rents to achieve the overall highest yield, or combination of rent and occupancy, at each property; Velocity™ billing and utility management services that increase collections and reduce delinquencies; LeasingDesk® risk mitigation systems that are designed to reduce a community’s exposure to risk and liability; and OpsTechnology® spend management systems that help owners manage and control operating expenses. Supporting this family of SaaS products is a suite of shared cloud services including electronic payments, document management, decision support and learning. Through its Propertyware subsidiary, RealPage also provides software and services to single-family rentals and low density, centrally-managed multifamily housing. For more information, call 1-87-REALPAGE or visit www.realpage.com.