RICHARDSON, Texas, (January 15, 2020) — After the U.S. apartment stock grew more than 2 million units during the past decade, the volume of annual completions will climb further as the 2020s begin, according to real estate technology and analytics firm RealPage, Inc. (NASDAQ:RP). Scheduled deliveries this year jump to 370,942 units, up 50 percent from the 2019 total of 246,779 units.
“Developers have struggled to produce enough new housing to meet demand in recent years,” according to Greg Willett, chief economist at RealPage, Inc. “However, the volume of apartments on the way in 2020 certainly could test the market’s ability to absorb a big block of additional units in a short time frame.
“The big jump in deliveries during 2020 means it’s likely that occupancy will slip a little from 2019’s record level. Pricing concessions, including periods of free rent, should be common at the new properties building an initial base of residents. Rent growth should slow for existing luxury projects in neighborhoods where construction is heaviest.”
Occupancy Hits Near-Record Level, and Rents Rise
Apartment occupancy at the end of 2019 stood at 95.8 percent. Since leasing is always seasonally slow in the fourth quarter, that figure is off from the rate of 96.3 percent posted in the third quarter. Still, late 2019 occupancy topped the year-earlier reading of 95.4 percent.
Rents for new-resident leases climbed 2.8 percent in 2019. The nation’s annual rent growth pace has been holding around the 3 percent mark since late 2016. Today’s average price is $1,414 per month.
Among the country’s large metros, the local rent growth leader is Phoenix, posting an annual increase in pricing of 8.1 percent. Other large metros logging year-over-year rent growth that tops 5 percent are Las Vegas and Nashville.
|Annual Rent Growth Leaders as of 4Q 2019|
|Large Metros||Growth||Small Metros||Growth|
|Phoenix, AZ||8.1%||Huntsville, AL||7.9%|
|Las Vegas, NV||5.7%||Bakersfield, CA||7.5%|
|Nashville, TN||5.2%||Tacoma, WA||6.4%|
|Greensboro/Winston-Salem, NC||4.8%||Tucson, AZ||6.2%|
|Sacramento, CA||4.7%||Worcester, MA||6.0%|
|Charlotte, NC||4.5%||Colorado Springs, CO||5.9%|
|Raleigh/Durham, NC||4.5%||Fresno, CA||5.9%|
|Riverside/San Bernardino, CA||4.2%||Boise, ID||5.8%|
|Austin, TX||4.1%||Albuquerque, NM||5.5%|
|Cincinnati, OH||3.9%||Santa Maria/Santa Barbara, CA||5.5%|
|Philadelphia, PA||3.7%||Salinas, CA||4.9%|
|Atlanta, GA||3.4%||Dayton, OH||4.7%|
|Source: RealPage, Inc.|
Completions Set to Double in Some Locations
Dallas/Fort Worth, which has led the country for apartment construction throughout the current economic cycle, again will be the delivery leader in 2020. Scheduled completions in North Texas total about 26,000 units, up 14 percent from the 2019 volume.
Other key construction centers this year include Los Angeles, Washington, DC, and Houston, set to add some 16,000 to 18,000 units apiece. Those three metros are among the locations where deliveries will climb the most, as completions scheduled for 2020 roughly double new supply finished during 2019.
This year’s additions also should come on stream at twice the 2019 pace in Boston, where new supply is anticipated at more than 11,000 units.
|2020 Apartment New Supply Leaderboard|
|2020||2019||# Change||% Change|
|Dallas/Fort Worth, TX||25,925||22,688||3,237||14%|
|Los Angeles, CA||17,582||7,610||9,972||131%|
|New York, NY||10,385||10,262||123||1%|
|Newark/Jersey City, NJ||9,998||6,996||3,002||43%|
|Source: RealPage, Inc.|
Total ongoing apartment construction in the U.S. tallies at 554,000 units, including roughly 183,000 units already underway for completion in 2021. That 2021 new supply figure will grow as building begins at additional properties during the next few months.
RealPage provides a technology platform that enables real estate owners and managers to change how people experience and use rental space. Clients use the platform to gain transparency in asset performance, leverage data insights and monetize space to create incremental yields. Founded in 1998 and headquartered in Richardson, Texas, RealPage currently serves over 18 million units worldwide from offices in North America, Europe and Asia. For more information about RealPage, please visit https://www.realpage.com.