Effective rents for U.S. apartments rose by 1.77% year-to-date compared with 1.24% during the same period a year ago; 2011 will be 'strong year' for apartment market: Axiometrics

Michelle Rivera

DALLAS , April 27, 2011 (press release) – Whether measured month-to-month, year-to-date, or annually, effective rent growth in the apartment market has been even stronger in the first quarter of 2011 than it was in the surprisingly robust first quarter of 2010, according to a report issued by Axiometrics Inc., a provider of data and analysis on the multi-family housing sector. Specifically, effective rents (rents net of concessions) have increased 1.77% year-to-date, as compared to growth of 1.24% during the same period of 2010.

Axiometrics also reported that the national occupancy rate increased for the second consecutive month to an average rate of 93.49% in March.

“After one quarter, it is clear that 2011 is going to be a very strong year for the apartment market in terms of effective rent growth and occupancy,” said Ron Johnsey, president of Axiometrics Inc. “Considering the revised job numbers we reported on earlier this month, which better support the strong effective rent growth we were seeing in 2010, we believe this may turn out to be one of the strongest years we have had since we began analyzing the apartment market in 1994.”

Axiometrics’ analysis indicated that effective rents increased 0.82% nationally between February and March. The growth in March was the highest Axiometrics has reported since it began monthly surveying in April of 2008, while annual effective rent growth increased from 4.64% in February to 5.02% in March.

Top Performing Markets – Effective Rents

Naples, FL has performed a 180 over the past year. In March 2010, its annual rent growth ranked 85th out of 88 markets; fast-forward one year and Naples holds the top spot in Axiometrics’ market rankings, with annual effective rent growth of 11.25%, and 4.57% on a year-to-date basis.

Phoenix also ranked as one of the best comeback stories of the past year. After ranking 81st a year ago, it moved into the top 10 of Axiometrics’ March analysis. Specifically, effective rents increased 3.24% over the first three months of 2011, resulting in an annual growth rate of 7.89%.

Top Performing Markets – Occupancy Rate

While the national occupancy rate improved again in March, the year-over-year gains have been diminishing since a peak of 162 basis points (bp) in November of 2010. March’s annual growth of 116 bp was the lowest since April of 2010.

As recently as two years ago, Long Island, NY and San Francisco, CA were the only two markets in the country with an occupancy rate of 95.0% or higher. This March, there were 27 markets at that rate or higher. Of the top 10 markets for occupancy rate, Minneapolis, MN and Providence, RI had the largest gains over the past year, with more than a 300 bp increase.

About Axiometrics

Axiometrics Inc. measures the performance of the apartment sector every month. The company tracks individual properties or portfolios owned by both private and publicly traded apartment REITs (Real Estate Investment Trusts), as well as properties owned and managed by private investors, developers, and management companies in more than 300 markets, totaling over 16,500 properties and 4.4 million units. Axiometrics delivers its data and analysis through a set of affordable, sophisticated tools that enable clients to improve property and investment performance at a fraction of the cost of the additional revenue generated. Learn more at www.axiometrics.com or call 214-953-2242.

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