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No Relief in Sight on Rents


The long anticipated slowdown in rent increases from record numbers of new multi-family projects opening for business has yet to materialize as rental demand drove rents to record levels in the first three quarters of 2015, sending the national apartment market soaring to its strongest year in a decade.

According to data from Axiometrics, a specialist in apartment market research and analysis:

  • Annual effective rent growth of 4.7% in the fourth quarter of 2015 represented a 7-basis-point (bps) increase from the figure of one year earlier (also rounded to 4.7%), though it was 35 bps lower than the 5.2% of the third quarter of 2015. The fourth-quarter rate is the highest year-end figure since 2005, when effective rent growth was 5.8%.
  • Rent growth has been 4.7% or above for five straight quarters, even though a three-quarter streak of at least 5.0% growth was broken. Never in Axiometrics’ 20-year history has annual effective rent growth been at 4.7% or above for such a long period.
  • Quarter-over-quarter effective rent growth was -0.6% in the fourth-quarter, continuing a trend of negative rent growth at the end of the year. That rate was a 32-bps decrease from the 0.3% reported in 4Q14 and marked the only quarter of 2015 in which the rent-growth rate decreased from the corresponding quarter of 2014. It should be noted that quarter-to-quarter rent growth is normally negative in the fourth quarter due to seasonality.
  • Average national rent was $1,244 for the fourth quarter of 2015, a $54 increase from the average of $1,188 in the fourth quarter of 2014.
Quarter 2012 2013 2014 2015
First 0.6% 0.4% 0.5% 0.9%
Second 2.2% 2.1% 2.7% 2.7%
Third 1.3% 1.2% 1.7% 2.0%
Fourth -0.6% -0.9% -0.3% -0.6%
 Source: Axiometrics Inc.


“Quarters 1-3 were the most robust period we have seen since before the Great Recession,” said Jay Denton, Axiometrics’ Senior Vice President of Analytics. “Much of the fourth-quarter moderation can be attributed to several Western markets that experienced double-digit rent growth for most of the year but could not sustain that pace.”

Denton added, “Those markets remain quite strong at 6% and higher rent growth. Axiometrics forecasted those metros to moderate, and they did late in the year. As expected, they remained among the top markets for rent growth despite the deceleration late in the year.”

In other metrics:

  • Occupancy was 95.0% in the fourth quarter, the highest 4Q rate since the 95.9% at the end of 2000. The 4Q15 rate was 38 bps lower than the 95.3% of 3Q15, but 10 bps higher than the 94.9% of 4Q14.
  • Annual effective rent growth was positive in 49 of Axiometrics’ top 50 markets, based on number of units. Only Oklahoma City was negative, at -0.6%. Two metros, Portland, OR (12.0%) and Oakland (11.3%), ended the year with double-digit rent growth.

Portland Remains No. 1 for Rent Growth

In the third quarter, Portland replaced Oakland as the metro with the highest annual effective rent growth among Axiometrics’ top 50 markets, and Oregon’s most populous area retained that distinction in the fourth quarter.

Oakland maintained the No. 2 position, but its Bay Area neighbors dropped in the rankings. San Francisco and San Jose, Nos. 3 and 5 last quarter, were Nos. 7 and 9 in the fourth quarter. California placed seven metros in the fourth-quarter top 25, including No. 3 Sacramento and No. 6 San Diego, while Florida placed five, including No. 5 Orlando.

The top 25 Metropolitan Statistical Areas (MSA) or Metropolitan Divisions — among Axiometrics’ top 50 markets with the most apartments — reported the following results:

Top 25 Markets by Annual Effective Rent Growth for 4Q15
MSA/Metropolitan Division Annual Effective Rent Growth
Portland-Vancouver-Hillsboro, OR-WA 12.0%
Oakland-Hayward-Berkeley, CA 11.3%
Sacramento-Roseville-Arden-Arcade, CA 9.3%
Seattle-Bellevue-Everett, WA 8.4%
Orlando-Kissimmee-Sanford, FL 8.0%
San Diego-Carlsbad, CA 7.7%
San Francisco-Redwood City-South San Francisco, CA 7.6%
Tampa-St. Petersburg-Clearwater, FL 7.3%
San Jose-Sunnyvale-Santa Clara, CA 7.1%
Riverside-San Bernardino-Ontario, CA 7.1%
Nashville-Davidson-Murfreesboro-Franklin, TN 7.0%
Phoenix-Mesa-Scottsdale, AZ 6.9%
Fort Worth-Arlington, TX 6.9%
Las Vegas-Henderson-Paradise, NV 6.7%
Denver-Aurora-Lakewood, CO 6.6%
Atlanta-Sandy Springs-Roswell, GA 6.6%
Boston-Cambridge-Newton, MA-NH 6.5%
Los Angeles-Long Beach-Glendale, CA 6.4%
Fort Lauderdale-Pompano Beach-Deerfield Beach, FL 6.3%
Salt Lake City, UT 6.2%
West Palm Beach-Boca Raton-Delray Beach, FL 6.2%
Dallas-Plano-Irving, TX 5.9%
Charleston-North Charleston, SC 5.6%
Charlotte-Concord-Gastonia, NC-SC 5.6%
Jacksonville, FL 5.2%
National 4.7%
Top 25 Markets by Quarterly Effective Rent Growth for 4Q15
MSA/Metropolitan Division Quarterly Effective Rent Growth
West Palm Beach-Boca Raton-Delray Beach, FL 2.3%
Salt Lake City, UT 1.2%
Tampa-St. Petersburg-Clearwater, FL 1.0%
Riverside-San Bernardino-Ontario, CA 0.9%
Anaheim-Santa Ana-Irvine, CA 0.9%
Phoenix-Mesa-Scottsdale, AZ 0.7%
Fort Lauderdale-Pompano Beach-Deerfield Beach, FL 0.6%
Orlando-Kissimmee-Sanford, FL 0.4%
Warren-Troy-Farmington Hills, MI 0.3%
Miami-Miami Beach-Kendall, FL 0.3%
Indianapolis-Carmel-Anderson, IN 0.2%
Los Angeles-Long Beach-Glendale, CA 0.2%
Sacramento-Roseville-Arden-Arcade, CA 0.2%
Las Vegas-Henderson-Paradise, NV 0.2%
San Diego-Carlsbad, CA 0.1%
Nashville-Davidson-Murfreesboro-Franklin, TN 0.1%
Fort Worth-Arlington, TX 0.1%
Columbus, OH -0.1%
Atlanta-Sandy Springs-Roswell, GA -0.1%
Dallas-Plano-Irving, TX -0.2%
Nassau County-Suffolk County, NY -0.3%
Birmingham-Hoover, AL -0.5%
Oklahoma City, OK -0.5%
Silver Spring-Frederick-Rockville, MD -0.5%
San Antonio-New Braunfels, TX -0.5%
National -0.6%


Top 25 Markets by Occupancy for 4Q15
MSA/Metropolitan Division 4Q15 Occupancy Change From 3Q15
Nassau County-Suffolk County, NY 97.0% 0.0%
Miami-Miami Beach-Kendall, FL 96.7% -0.1%
New York-Jersey City-White Plains, NY-NJ 96.6% -0.4%
Los Angeles-Long Beach-Glendale, CA 96.2% 0.1%
San Francisco-Redwood City-South San Francisco, CA 96.0% -0.6%
Sacramento-Roseville-Arden-Arcade, CA 96.0% 0.0%
San Diego-Carlsbad, CA 95.9% 0.4%
Oakland-Hayward-Berkeley, CA 95.9% -0.4%
Fort Lauderdale-Pompano Beach-Deerfield Beach, FL 95.9% 0.1%
Minneapolis-St. Paul-Bloomington, MN-WI 95.9% -0.8%
Nashville-Davidson-Murfreesboro-Franklin, TN 95.9% -0.3%
Boston-Cambridge-Newton, MA-NH 95.9% -0.3%
Orlando-Kissimmee-Sanford, FL 95.8% -0.2%
Salt Lake City, UT 95.8% -0.4%
Tampa-St. Petersburg-Clearwater, FL 95.7% -0.1%
Charlotte-Concord-Gastonia, NC-SC 95.7% -0.2%
Anaheim-Santa Ana-Irvine, CA 95.6% -0.2%
Portland-Vancouver-Hillsboro, OR-WA 95.6% -0.8%
Fort Worth-Arlington, TX 95.5% -0.3%
Columbus, OH 95.4% -0.4%
Riverside-San Bernardino-Ontario, CA 95.4% 0.2%
Dallas-Plano-Irving, TX 95.3% -0.3%
Kansas City, MO-KS 95.3% -0.5%
Philadelphia, PA 95.3% -0.4%
Seattle-Bellevue-Everett, WA 95.3% -0.6%
National 95.0% -0.4%

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