RealPage® Reports Robust Apartment Demand and Occupancy, While the Rent Growth Pace Cools Mildly


Scheduled deliveries jump 26 percent to more than 364,000 units in 2017.

RICHARDSON, Texas (January 3, 2017) – U.S. Near-record demand for rental apartments registered in 2016, according to rental housing technology and analytics firm RealPage, Inc. (NASDAQ: RP) In turn, occupancy remained tight, despite rising numbers of completions. The rent growth pace is slowing a little, but pricing power remains above the historical norm.

“The apartment sector’s winning streak has run seven full years so far,” RealPage chief economist Greg Willett said. “Job production continues at solid levels, encouraging new household formation. While apartment construction is substantial, significant building is justified by the very strong demand tallies.”

Demand for 328,559 apartments was recorded in 2016 across the country’s 100 largest metros, up 24 percent from 2015’s net move-in total. The 2016 demand figure was the third largest calendar year volume posted during the past three decades, just behind the demand realized in 2000 and again in 2010.

A slew of new properties moving through initial lease-up fueled unusually strong demand for 50,455 units in the fourth quarter, a period when renters tend to be hesitant to move due to the holidays and sometimes challenging weather conditions. Demand in the fourth quarter of 2016 reached more than six times the volume recorded in the fourth quarter of 2015.

Demand in 2016 topped completions that totaled 289,704 apartments. As usual, however, demand in the fourth quarter didn’t keep pace with deliveries. Properties finished during the final three months of the year totaled 87,939 units. The late 2016 additions marked the biggest block of quarterly new supply seen since the mid-1980s.

Occupancy Remains Tight; Rent Growth Slows Mildly
Year-end 2016 apartment occupancy stood at 96.3 percent, up from 95.9 percent in late 2015. Following the normal seasonal pattern, occupancy cooled a bit on a quarterly basis, dipping from 96.5 percent as of September.

Almost all of today’s vacancies in most locales are found in the very expensive brand new completions moving through initial lease-up. It can be very tough to find available units in the middle-tier to lower-end price ranges.

Rent growth is continuing to cool from an annual pace that topped out over 5 percent in 2015, but the 3.8 percent typical price increase posted in 2016 is still well above the long-term historical norm. Over the course of the seven years of the current apartment market cycle, rents have increased a whopping 26.3 percent.

“Rent growth doesn’t have to reach best-ever readings to be strong,” Willett said. “Somewhat smaller price increases certainly were anticipated as the volume of new construction kicked into higher gear.”

While rents backed up 0.5% on a quarterly basis in late 2016, that move is a typical quarterly pattern.

“It’s unusual for rents to shift much during the seasonally slow leasing period,” according to Willett. “Other than in brand new properties renting for the first time, only a few leases are signed in the cold weather months.”

Monthly rents now average $1,248 nationally.

Quite a few of the country’s individual metro rent growth leaders have economies where recovery trailed the national norm and apartment construction hasn’t yet reached aggressive levels. Sacramento and Riverside-San Bernardino, holding down the first and second positions for rent growth, are key examples.

Leaders in Annual Rent Growth for New Residents
Calendar 2016
Rank Metro Rent Growth
1 Sacramento, CA 9.3%
2 Riverside-San Bernardino, CA 8.5%
3 Seattle, WA 7.8%
4 Phoenix, AZ 7.1%
5 Las Vegas, NV 6.8%
6 Fort Worth, TX 6.7%
7 Nashville, TN 6.5%
8 Los Angeles, CA 6.4%
9 Atlanta, GA 6.3%
10 Portland, OR 6.2%
11 (tie) Atlanta, GA 6.5%
11 Dallas, TX 6.0%
12 (tie) Providence, RI 5.8%
12 (tie) Tampa-St. Petersburg, FL 5.8%
14 Salt Lake City, UT 5.4%
15 (tie) Orange County, CA 5.3%
15 (tie) San Diego, CA 5.3%

Other markets on the rent growth leaderboard are spots where very robust economic growth is keeping the apartment sector performance strong in the face of big deliveries. Seattle and the North Texas metros of Dallas and Fort Worth illustrate that storyline. That rent growth of 6 percent to 7 percent in Dallas-Fort Worth is particularly striking, considering the area accounted for an outsized share of about

7 percent of the nation’s total apartment deliveries in 2016. There are now 49,955 apartments under construction in Dallas-Fort Worth, representing about 9 percent of building activity nationally. That’s the country’s biggest block of product on the way by a giant margin.

Rent cuts continue in a handful of the nation’s key apartment markets. Prices are down about 1 percent on an annual basis across New York (-1.4 percent), Houston (-1.3 percent), San Jose (-1.2 percent) and San Francisco (-0.8 percent).

“While increasing deliveries are creating a more competitive leasing environment for top-tier product in New York and the Bay Area, rent cuts, rather than just a slowdown in the growth pace, seem like an extreme move in many cases,” Willett said. “Bay Area owners and operators perhaps are beginning to realize that they’ve overreacted, as pricing looks like it’s nearing stabilization after more sizable cuts were common a few months ago.”

Deliveries Should Peak in 2017
Ongoing apartment construction in the nation’s 100 largest apartment markets totals 542,446 units, with 364,730 of those apartments found in properties scheduled for 2017 completion. Thus, new supply in the coming year could top 2016’s total by 26 percent. That big bump in deliveries points to more competitive leasing conditions, especially for top-tier properties in the urban core, where building is heavy by historical standards.

It is important to realize, however, that labor shortages and other factors consistently have held completions in this market cycle about 10 percent to 15 percent below the volumes scheduled initially. If that same pattern holds true moving ahead, 2017’s deliveries could line up almost exactly with the demand total posted over the past year, suggesting that concerns about market softening could be overblown.

RealPage’s base-case forecast calls for occupancy to slip about 70 basis points to a still-healthy level well above 95 percent and for annual rent growth to cool a bit further to about 3.2%.


RealPage is a leading global provider of software and data analytics to the real estate industry. Clients use our platform to improve operating performance and increase capital returns. Founded in 1998 and headquartered in Richardson, Texas, RealPage currently serves over 12,000 clients worldwide from offices in North America, Europe and Asia. For more information about the company, visit