DALLAS, TX - Annual effective rent growth for the U.S. apartment market was 5.0% in March 2015, the second straight month in which the benchmark apartment metric was at 5% or above. The last two-month streak of 5% or higher was June-July 2011, according to Axiometrics, the leader in apartment market research and analysis.
The national annual rent growth rate was a slight decrease from February's 5.1%, yet was the highest March figure since 2011, when the rate was also 5.0%. March's effective rent growth metric was up from the 3.2% of March 2014.
The average U.S. renter paid $1,187 monthly in March, $57 more than the $1,130 average nationwide rent in March 2014.
"The national apartment market was robust in the first quarter of 2015, continuing the strength of 2014," said Stephanie McCleskey, Axiometrics Vice President of Research. "Rent growth in March reflected the strong job gains of January and February. Looking forward, we will be interested to see if the poor March jobs report affects the apartment market in the second quarter."
The performance of publicly traded apartment REITs was particularly strong in March, with the 12 trusts recording combined average effective rent growth of 6.1%, some 108 basis points (bps) above the overall national figure.
The average monthly rent at REIT properties nationwide was $1,681, some $494 higher than the overall average.
"The REITs perform well because their properties tend to be located in the strongest markets, they are well managed and many of the properties are Class A or B+," McCleskey said. "Investors and managers would be wise to emulate their strategies when possible."
Occupancy on the Rise
The national occupancy rate for March was 94.9%, a 21-bps increase from February's 94.7% and 36 bps above March 2014's 94.6%. This metric represented the highest post-recession occupancy rate for March.
The occupancy rate increased for the second straight month following a five-month streak of decreases, which began after the 95.2% occupancy reported in August 2014. The August figure was the highest since Axiometrics began monthly occupancy tracking in April 2008.
"Now that the winter weather has subsided, people have started moving into new apartments," McCleskey said. "And, again, lots of jobs were created in January and February, so the newly hired were able to move away from their parents' homes or decouple from a roommate."
Oakland Leads; Welcome, Anaheim
Oakland maintained the strongest annual effective rent growth (15.3%) among Axiometrics' top 50 markets in March, based on number of units. Denver dropped from second to third with its 11.5%, while San Jose moved up two spots to second with an effective rent growth rate of 12.0%.
The renamed Anaheim-Santa Ana-Irvine, CA Metropolitan District (previously Santa Ana-Anaheim-Irvine, CA; it still consists of only Orange County) reached No. 13, with an annual effective rent growth of 6.6% in March. The metro's 116-bps rise from February's rate of 5.5% represented the biggest increase among the top 50 markets, and was also a 445-bps increase from March 2014's 2.1%.
Portland, OR's 96-bps increase to 9.3% from February to March lifted the metro to fifth place among the top 50.