Apartment Market Strengthens in February According to Latest Axiometrics' Market Survey

Apartment Market Strengthens in February According to Latest Axiometrics' Market Survey

DALLAS, TX - Annual effective rent growth in the national apartment market measured 5.0% in February 2015, the highest it has been in 44 months, according to Axiometrics, the leader in apartment research and analysis.

February was the second time in three months the metric has reached that mark -- when rounded to one decimal place. Extending the figure a second decimal place, February's rate of 5.05% was 8 basis points (bps) higher than December 2014's 4.97%.

The last time annual effective rent growth exceeded February's rate was in July 2011, when it increased 5.3%.

"The market dynamics from 2014 are continuing for several reasons," said Stephanie McCleskey, Axiometrics' Vice President of Research. "The apartment metrics reflect continued job growth throughout the nation. With 295,000 new jobs added in January and the headline unemployment rate down to 5.5%, more and more people are out there looking for apartments.

"Also, this February has an advantage over last year at this time because of the weather," McCleskey added. "Though Boston suffered record snowfall, winter weather in the rest of the nation was nowhere near the 'snow-pocalypse' of last year. That meant movement and construction proceeded at a normal pace for February." 

February's annual effective rent growth rate was 16 bps higher than the 4.9% of January 2015 and 223 bps above the 2.8% of February 2014 (which was the second lowest annual effective rent growth rate in the past three years).

Year-to-date (YTD) effective rent growth was 1.0% in February, tied for second with 2010 and 2012 among post-recession years, and behind only 2011. The February rate was also 10 bps higher than the post-recession second-month average of 0.9%.

Occupancy Reverses Down Streak
February's occupancy rate of 94.7% was the highest of any February since the end of the recession. This marks the 61st straight month in which the occupancy rate has been higher than the same month of any preceding year since 2009.

More importantly, the February increase of 12 bps from January's 94.6% occupancy ended a five-month streak of occupancy rate decreases since the metric reached its post-recession peak of 95.2% in August 2014. The February 2015 rate is a 45 bps increase over the 94.3% of February 2014.

"The rise in occupancy rates is good news, and it shows that demand and new supply are more in balance," McCleskey said. "But with more apartments identified for delivery this year than in any other post-recession year, we still expect a little bit of moderation in the occupancy rate as the year progresses."

Denver Rises to 2nd, but California Still Dominates
Denver rose to second place in annual effective rent growth among Axiometrics' top 50 markets, breaking the grip that San Francisco Bay Area metros have had on the top two spots for the better part of the last year.

Denver's 12.7% effective rent growth was enough to displace San Francisco from the No. 2 spot.

But fear not for the Bay Area, as its three metros were all among the top four. Oakland remained No. 1 with 15.5% annual effective growth in February. Oakland also had the second-highest occupancy rate out of Axiometrics' Top 50 markets at 96.6%, behind only New York's 97.0%. That's 180 basis points above the national occupancy rate, which was 94.8%.

Seven out of 17 markets on the list below are California markets, and three are in Florida.

"Denver's annual effective rent growth rate increased 104 basis points from January, while San Francisco's decreased by 40 basis points," McCleskey said. "That doesn't mean San Francisco's market is weakening. Far from it. But it does mean that Denver's apartment market is heating up even more."

Source: Axiometrics / #Apartments #Multifamily

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