Rents Stayed Hot in January

The national apartment market enjoyed its strongest January of the post-recession period last month, recording annual effective rent growth of 4.9 percent and occupancy of 94.6 percent, according to data from Axiometrics.

The January 2015 rent growth rate was a slight decrease from the 5 percent recorded in December, but was still the second highest level since August 2011. That slight decrease, however, broke a 10-month streak in which the annual effective rent growth level increased from the previous month.

“We expected rent growth to moderate in 2015 after the spectacular growth of 2014,” Axiometrics Vice President of Research Stephanie McCleskey said. “However, January’s numbers reflect an apartment market that is continuing the strength of 2014.”

January 2015′s rent growth was the strongest of any January since Axiometrics started reporting the metric monthly in April 2009 — and represented a 202-bps increase from January 2014. Axiometrics collects the data by calling every property in its database every month. The rundown:

January 2015: 4.9 percent.

January 2014: 2.9 percent.

January 2013: 3.6 percent.

January 2012: 4.1 percent.

January 2011: 4.5 percent.

January 2010: -4.1 percent.

Occupancy Remains Steady

Occupancy remained at 94.6 percent in January 2015. As was the case with effective rent growth, last month’s occupancy rate was the highest of any January since Axiometrics started recording the metric monthly in April 2008.

The January 2015 rate was a 48-bps increase from the 94.1 percent of January 2014. The rate was the same in January 2013; 93.4 percent in January 2012; 93.1 percent in January 2011; and 91.6 percent in January 2010.

The national occupancy rate has exceeded 94 percent for 34 straight months.

California still in the lead

The top four markets for annual effective rent growth in January 2015 were the same as the previous month’s. Oakland, CA, remained atop Axiometrics’ top 50 market list with rent growth of 14.3 percent. Oakland also had the highest occupancy (96.6 percent) and revenue growth (14.8 percent), which is effective rent growth plus occupancy change.

“Desirable jobs are being created in the Bay Area by successful entrepreneurs who are tapping into the ever-growing tech industry,” McCleskey said. “That’s great news for landlords. Oakland remains No. 1 because it is a more affordable alternative to San Jose and San Francisco, and new supply remains at a minimum there.”

Nashville was the biggest mover on the chart, rising from 17th to 13th as annual effective rent growth surged from 5.8 percent to 6.4 percent. Tampa-St. Petersburg (5.3 percent effective rent growth) and Orlando (5.9 percent) are new on the top 17 list, which now contains four Florida MSAs. Florida did lose one from the chart, as Miami, along with Las Vegas, dropped off.

The list contains five California MSAs, four of which are in the top 10 (Oakland, San Francisco, San Jose and Sacramento). San Francisco and San Jose were right behind Bay Area neighbor Oakland in occupancy, at 96.3 percent and 96.1 percent, respectively. The three MSAs stayed at the top in revenue growth, though Denver (12.3 percent revenue growth) squeezed between San Francisco (13.3 percent) and San Jose (11.2 percent) in third place.

 

			Annual Effective Rent Growth		Occupancy Rate		Revenue Growth
Rank		MSA	Jan-14	Jan-15	Jan-14	Jan-15	Jan-14	Jan-15
1		Oakland, CA	8.3%	14.3%	96.2%	96.6%	8.3%	14.8%
2		San Francisco, CA	6.5%	12.5%	95.5%	96.3%	7.1%	13.3%
3		Denver, CO	7.1%	11.7%	95.1%	95.6%	7.4%	12.3%
4		San Jose, CA	8.8%	10.9%	95.9%	96.1%	8.8%	11.2%
5		West Palm Beach, FL	3.8%	8.8%	95.5%	95.8%	4.8%	9.1%
6		Sacramento, CA	5.0%	8.3%	95.2%	95.5%	6.6%	8.7%
7		Atlanta, GA	5.2%	8.0%	93.2%	93.8%	6.3%	8.7%
8		Portland, OR	8.4%	7.5%	95.7%	95.9%	9.2%	7.8%
9		Fort Lauderdale, FL	3.6%	7.1%	94.9%	95.4%	4.1%	7.6%
10		Seattle, WA	5.8%	6.9%	95.2%	95.4%	5.8%	7.1%
11		Phoenix, AZ	3.5%	6.5%	93.4%	94.7%	4.0%	7.8%
12		Fort Worth, TX	3.5%	6.4%	94.0%	95.0%	3.5%	7.4%
13		Nashville, TN	4.6%	6.4%	95.6%	95.4%	4.9%	6.2%
14		Charleston, SC	3.2%	6.4%	93.4%	94.4%	4.8%	7.4%
15		Orlando, FL	3.8%	5.9%	94.0%	95.2%	3.7%	7.2%
16		Los Angeles, CA	3.7%	5.4%	95.5%	95.7%	3.8%	5.6%
17		Tampa, FL	2.1%	5.3%	94.0%	94.9%	2.4%	6.3%
		National	2.9%	4.9%	94.2%	94.6%	3.0%	5.4%
Selected Other Markets
1		Odessa, TX	9.0%	18.4%	98.0%	96.7%	9.0%	17.1%
7		North Port, FL	7.9%	11.3%	96.4%	96.7%	8.3%	11.6%
11		Salinas, CA	2.2%	9.2%	93.8%	97.7%	4.5%	13.4%
15		Honolulu, HI	-5.4%	8.1%	92.3%	94.4%	-9.1%	10.4%
18		Greenville, SC	0.3%	7.2%	93.7%	94.9%	-0.2%	8.6%
*Rank is based on annual effective rent growth in January 2015 for Axiometrics Top 50 Markets. Selected other markets are based on Axiometrics Top 121 Markets. Axio tracks properties in more than 450 MSAs throughout the country.
Source: Axiometrics Inc.