Apartment occupancy remained tight during the third quarter, and rents continued to climb at a pace above the historical norm, according to MPF Research, an industry-leading market intelligence division of RealPage, Inc. (NASDAQ: RP). The healthy quarterly performance reflected strong leasing activity at new developments coming on-stream plus solid pricing power at most already-full existing properties. MPF Research analysts highlight the nation’s latest apartment occupancy and rent growth statistics as well as other key performance indicators in a discussion found at www.realpage.com/MPFQ3-2013-Report.
Occupancy in the nation’s 100 largest metros averaged 95.4 percent during the third quarter. Occupancy has been hovering around the essentially-full mark of 95 percent for two years, with slight moves seen from one quarter to another aligning with normal seasonal patterns.
Effective rents for new leases grew 1.2 percent during the quarter, taking the annual pace of increase to 3.2 percent. Middle-market projects, which comprise the largest block of the nation’s total apartments, now rank as the apartment rent growth leaders by product segment. Pricing for those units climbed 3.5 percent over the past year, versus growth of approximately 3 percent in the bottom-tier communities and just over 2 percent in the top-of-the-market existing developments.
“Middle-market properties are in the sweet spot right now,” according to MPF Research vice president Greg Willett. “Only a handful of units are available in that product niche across most metros, and the residents living in that stock generally can’t afford to buy housing or to rent the high-end new apartment supply that’s being delivered now.”“More modest rent growth in top-tier product reflects the impact of new units moving through initial lease-up,” Willett said. “While those new completions are leasing very quickly, the best existing properties are experiencing a bit more resident turnover, since some households are opting to move from the top existing product to the even-better brand new stock. The units that get vacated fill again pretty quickly, but that turnover does have a tendency to slow rent growth.”