The apartment market in October showed typical seasonal slowing in effective rent growth and occupancy, according to Dallas-based Axiometrics Inc.
Axiometrics reports that for the month, annual effective rent growth measured 2.99%, while occupancy declined slightly to 94.70%.
‘Thus far, we are not seeing any macro-level indicators signaling a larger-than-normal seasonal decline this fourth quarter,’ says Ron Johnsey, president of Axiometrics. ‘Rent and occupancy growth this October was similar to what we reported for 2010, 2011, and 2012. Likewise, lease-up properties are absorbing well and offering very little in concessions, even though new supply continues to increase.’
At the national level, sequential effective rent growth was almost identical to the same period of 2012, with effective rents declining by -0.30% between September and October to 2.99%. In 2008, Axiometrics reported a more substantial decline of -0.64% in October, but this year, effective rents are trending closer to the mild declines for the fourth quarters of 2010, 2011 and 2012.
Even with the seasonal slowdown, Axiometrics says that 17 of the top 88 metropolitan statistical areas (MSAs) reported annual effective rent growth of greater than 5.00% in October.
Two late recovering Florida markets, Naples and Cape Coral, ranked as top performers with effective rent growth of 11.30% and 8.38%, respectively. Other notable MSAs with annual growth rates greater than 5.00% in October included Boulder, Colo. (9.43%); Oakland, Calif. (8.44%); San Francisco (8.18%); and Seattle (6.49%).
At the bottom of the rankings, Washington, D.C., reported an annual growth rate of -1.00%, while Philadelphia had its second consecutive month of negative annual growth (-0.70%).
Nationally, the occupancy rate decreased to 94.7% in October after reaching Axiometrics' forecast rate for the end of 2013 for the last several months. The occupancy declined 21 basis points from September but is still up 14 basis points from October of last year. Also, the national occupancy rate remains near its high for the past 12 years. Currently, 44 of the top 88 MSAs have an average occupancy rate greater than 95.0%, according to Axiometrics.
Separetely, Axiometrics also reports that deliveries scheduled for 2014 and 2015 have continued to increase as more units started construction in 2013. In 2014, Axiometrics expects deliveries to measure nearly two times the level they were in 2013 and nearly three times the level of 2012.
‘While at a national level we have begun to see construction starts leveling out or even slowing, we have yet to see a peak in deliveries,’ adds Johnsey. ‘As 2013 progressed, more properties advanced from the planning to construction stage; thus, over the past six months, our identified delivery count for 2014 has increased from 133,000 to approximately 230,000.’
