Occupancy reaches 95.4 percent and rents climb 4.6 percent annually
Company Website:
http://www.realpage.com
CARROLLTON, Texas -- (Business Wire)
Demand for apartments across the U.S. is continuing to rise, and the
rapid leasing pace is pushing up occupancy and rent growth, according to MPF
Research, the rental market intelligence division of RealPage,
Inc. (NASDAQ: RP).
Running counter to the historically typical pattern of seasonally slow
leasing during the winter months, apartment demand for a hefty total of
64,297 units registered across the country’s 100 largest metropolitan
areas in the first quarter of 2015. That product absorption volume
topped the demand tally for the initial three months of 2014 by 55
percent. The annual apartment demand count climbed to 276,513 units as
of the first quarter, up 44 percent from early 2014’s annual product
absorption pace.
“Accelerating job creation is allowing more young adults to form new
households, and almost all of the new households are opting to rent,”
said MPF Research vice president Greg Willett. “At the same time,
relatively few of the more-established renters are leaving apartments to
make home purchases for the first time.”
Demand volumes and other key performance indicators for the U.S.
apartment market are discussed by MPF Research analysts in
this video.
While cities of all sizes throughout the country are realizing strong
apartment demand relative to local historical norms, just a handful of
spots are driving national absorption to such high levels, according to
the MPF Research analysis. The top 15 metros for apartment leasing
accounted for 56 percent of the nation’s total demand that registered
during the past year.
Most of the country’s apartment demand is focused in Sun Belt and West
Coast metros that are adding particularly large numbers of both jobs and
households. Texas plays an especially outsized role in the total demand
results. Dallas-Fort Worth, Houston, Austin and San Antonio combined to
account for 20 percent of total apartment demand nationally during the
past year. That share of demand doubles the 10 percent share of U.S.
existing apartment inventory found in the big Texas markets.
Washington, DC, Chicago and Boston are among the few places in the
Northeast, Mid-Atlantic and Midwest regions making sizable contributions
to U.S. apartment demand.
Demand surpassing completions pushed the country’s apartment occupancy
rate to 95.4 percent in the first quarter. That figure is up 10 basis
points from the fourth-quarter 2014 reading and up 40 basis points
annually.
“Product availability is very limited in the middle-priced and
most-affordable properties across the entire country,” Willett said.
“The bulk of the available stock is found in brand new, expensive
projects that are moving through the initial lease-up process.”
|
|
| |
|
| |
Annual Apartment Demand Leaders |
Year Ending in the First Quarter 2015 |
| | | | | |
|
| | | | | | Units |
Rank | | | Metro | | | Absorbed |
1
| | |
Dallas-Fort Worth
| | |
18,023
|
2
| | |
Houston
| | |
15,872
|
3
| | |
Washington, DC
| | |
14,336
|
4
| | |
Los Angeles
| | |
13,292
|
5
| | |
Austin
| | |
12,940
|
6
| | |
Denver-Boulder
| | |
10,465
|
7
| | |
Atlanta
| | |
9,217
|
8
| | |
Chicago
| | |
8,834
|
9
| | |
Boston
| | |
8,325
|
10
| | |
Seattle-Tacoma
| | |
8,010
|
11
| | |
San Antonio
| | |
7,368
|
12
| | |
Charlotte
| | |
7,199
|
13
| | |
Phoenix
| | |
6,951
|
14
| | |
Orlando
| | |
6,450
|
15
| | |
Raleigh-Durham
| | |
6,169
|
| | | | | |
|
Effective rents for new leases jumped 0.7 percent during the first
quarter, and the annual price increase came in at 4.6 percent. Annual
rent growth as of the first quarter matched the rate of increase seen in
late 2014. The pace of annual price acceleration is up from 3.2 percent
a year ago.
Renters in Denver-Boulder are experiencing the country’s steepest price
growth. During the past year, Denver-Boulder rents for new leases jumped
10.5 percent, just ahead of the 10.2 percent rent growth recorded in
both Oakland and San Francisco. While Denver-Boulder has ranked among
the nation’s stronger rent growth performers throughout recent years,
early 2015 is the first time that the market has been in the very top
spot.
Apartment rents climbed 9.3 percent during the year-ending in the first
quarter in San Jose, and increases of 7.2 to 7.9 percent occurred in
Portland, Atlanta and West Palm Beach. Growth of 6.4 to 6.7 percent was
seen in Sacramento, Fort Worth and Los Angeles.
Markets just missing top ten positions for annual rent growth include
Nashville, Las Vegas, San Diego, Fort Lauderdale and Seattle-Tacoma, all
with increases of 5.3 to 5.7 percent.
There are a couple of particularly interesting stories seen within the
markets in the #11 to #15 positions for annual rent growth. Las Vegas
now ranks among the nation’s better performers for rent growth for the
first time in this market cycle. Occupancy in this late-recovering
economy finally has tightened enough to create strong pricing power for
apartment owners and operators. Seattle-Tacoma, while still registering
rent growth above the national norm, is not a top ten performer for the
first time in five years. A surge in apartment deliveries is cooling off
apartment rent increases among the best properties in Seattle’s urban
core.
|
Annual Apartment Rent Growth Leaders |
Year Ending in the First Quarter 2015 |
|
|
| |
|
| |
Rank | | | Metro | | | Rent Growth |
1
| | |
Denver-Boulder
| | |
10.5%
|
2 (tie)
| | |
Oakland
| | |
10.2%
|
2 (tie)
| | |
San Francisco
| | |
10.2%
|
4
| | |
San Jose
| | |
9.3%
|
5
| | |
Portland
| | |
7.9%
|
6
| | |
Atlanta
| | |
7.5%
|
7
| | |
West Palm Beach
| | |
7.2%
|
8
| | |
Sacramento
| | |
6.7%
|
9
| | |
Fort Worth
| | |
6.6%
|
10
| | |
Los Angeles
| | |
6.4%
|
11 (tie)
| | |
Las Vegas
| | |
5.7%
|
11 (tie)
| | |
Nashville
| | |
5.7%
|
11 (tie)
| | |
San Diego
| | |
5.7%
|
14 (tie)
| | |
Fort Lauderdale
| | |
5.3%
|
14 (tie)
| | |
Seattle-Tacoma
| | |
5.3%
|
| | | | | |
|
MPF Research is forecasting that U.S. apartment occupancy will ease
mildly to 95 percent over the next year and that the annual rent growth
pace will cool to 3.6 to 3.9 percent. While demand should remain very
strong, absorption likely won’t quite keep pace with completions. Just
over 400,000 apartments currently are under construction in the nation’s
top 100 metros, with 280,000 to 290,000 of those units scheduled to be
completed during the next 12 months.
“Even with occupancy and rent growth anticipated at levels somewhat
lower than seen currently, this outlook is still very healthy, well
above the historical norm,” Willett said. “We’re not on a path toward
overbuilding in the big picture, though select neighborhoods in a
handful of metros could register more meaningful softening in overall
performance due to the volume of new supply.”
About RealPage
RealPage, Inc. is a leading provider of comprehensive property
management software solutions for the multifamily, commercial,
single-family and vacation rental housing industries. These solutions
help property owners increase efficiency, decrease expenses, enhance the
resident experience and generate more revenue. Using its innovative SaaS
platform, RealPage's on demand software enables easy system integration
and streamlines online property management. Its product line covers the
full spectrum of property management, leasing and marketing, asset
optimization, and resident services solutions. Founded in 1998 and
headquartered in Carrollton, Texas, RealPage currently serves over
10,000 clients worldwide from offices in North America, Europe and Asia.
For more information about the company, visit http://www.realpage.com.
Contacts:
RealPage, Inc.
Media
Karen McDonald, 972-820-3718
karen.mcdonald@realpage.com
or
Investor
Relations
Rhett Butler, 972-820-3773
rhett.butler@realpage.com
Source: RealPage, Inc.
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