New resident pricing jumps 4.8 percent, while occupancy registers at 95.8 percent
(January 4, 2016) — Rents for new residents of U.S. apartment communities rose 4.8 percent in 2015, according to MPF Research, the rental market intelligence division of RealPage, Inc. (NASDAQ: RP). This marks six consecutive years of rent increases at or above the norm of 2.7 percent, with the total price increase reaching 22.5 percent.
However, as is typical in the slow leasing period of the cold weather months, year-end prices held roughly steady relative to the rental rates seen in the third quarter, inching down 0.1 percent.
Typical apartment rent across the country’s 100 largest metros now stands at $1,244 per month.
“Continuing strong rent growth reflects the fact that product availability remains unusually low,” said RealPage chief economist Greg Willett. Fourth quarter 2015 occupancy registered at 95.8 percent, up from 95.5 percent a year ago and 92.0 percent when the recession led to big move-outs in 2009.
Delivery Timing is an Influence to Watch
Delayed deliveries tied to labor shortages in select building trades are having a significant impact on the apartment market’s overall performance, according to Willett. “Pushing back completion dates two or three months is translating to a longer pre-leasing period for new properties coming on stream. Those new projects are finally opening with better-than-expected occupancy, and that occupancy premium helps boost rent growth.”
A total of 232,168 units were completed across the country’s 100 largest markets in 2015, well under the 300,000 units initially scheduled. As a result, new supply in 2015 dropped 8 percent from 2014’s tally of 252,348 units, rather than jumping the expected 20 percent.
Properties now under construction total 443,240 units, with 311,511 of those units currently targeted for completion in 2016. Next year’s new supply could top 2015’s total by as much as 34 percent.
“That many additions would likely lower occupancy slightly and slow rent growth moderately,” Willett said. “However, if 20 to 30 percent of 2016’s scheduled deliveries are delayed until 2017, it wouldn’t be especially surprising to see another year of occupancy and rent growth like 2015.”
West Region Rent Growth Remains Strongest, but the Southeast and Texas Gain Momentum
Metros in the West have dominated the nation’s rent growth during the past few years, and 2015 continued that trend. At the end of 2015, the country’s seven strongest performers were found in the West, including Portland at 12.7 percent, followed by Oakland, Sacramento, Seattle, San Diego, Las Vegas and Denver, all between 7.2 and 9.5 percent.
The Southeast, including Florida as a whole, and some Texas metros also had some big market movers. Annual rent growth of 6.6 to 6.9 percent was seen in West Palm Beach, Tampa, Fort Lauderdale, Orlando, Atlanta and Fort Worth. Metros in the area just missing the ranking were Nashville, Charlotte, Dallas and Austin, with price increases of 5.6 to 6.5 percent.
|Leaders in Annual Rent Growth for New Residents
Year Ending in the Fourth Quarter 2015
|5||San Diego, Calif.||7.7%|
|6||Las Vegas, Nev.||7.5%|
|8||West Palm Beach, Fla.||6.9%|
|9 (tie)||Atlanta, Ga.||6.8%|
|9 (tie)||Fort Worth, Texas||6.8%|
|9 (tie)||Tampa, Fla.||6.8%|
|12 (tie)||Fort Lauderdale, Fla.||6.7%|
|12 (tie)||Phoenix, Ariz.||6.7%|
|12 (tie)||San Jose, Calif.||6.7%|
For more information on MPF Research, visit www.realpage.com/mpf-research/.
RealPage, Inc. is a leading provider of comprehensive property management software solutions for the multifamily, commercial, single-family, and vacation rental housing industries. These solutions help property owners increase efficiency, decrease expenses, enhance the resident experience, and generate more revenue. Using its innovative SaaS platform, RealPage’s on-demand software enables easy system integration and streamlines online property management. Its product line covers the full spectrum of property management, leasing and marketing, asset optimization, and resident services solutions. Founded in 1998 and headquartered in Carrollton, Texas, RealPage currently serves over 11,000 customers worldwide from offices in North America, Europe, and Asia. For more information about the company, visit https://www.realpage.com.