Effective apartment rent growth remained steady during February, at a rate of 3.53%, but the pace of rent growth has been slowing in recent months, according to new data from Dallas-based Axiometrics Inc.
February's effective rent growth rate was the lowest since August 2010, Axiometrics reports, while occupancy remained strong nationally with an average rate of 94.13% last month. This rate is up 35 basis points (bps) from February 2012 and 71 bps from February 2011.
Nationally, annual effective rent growth declined from 3.62% in January to 3.53% in February; the annual growth rate was 3.96% a year ago. Axiometrics reports that the growth rate has slowed in nine of the last 10 months as many metropolitan statistical areas are moderating from very strong rent growth the previous three years. Peak annual rent growth at the national level during this cycle was 5.32% in July 2011.
Occupancy at the national level remained relatively stable in February, though it did increase from 94.05% in January to 94.13% in February. Axiometrics forecasts that the national average occupancy rate will reach 94.9% this year.
‘A pattern has emerged this year, as effective rent growth for Class A properties has really slowed down, Class B rates have remained relatively steady, but Class C rates have continued to increase,’ says Ron Johnsey, president of Axiometrics. ‘Rents had been pushed so much at the upper end of the market it was inevitable we would begin to see a slowdown in growth for Class A properties, but we may also be seeing some impact from new properties coming online in certain markets. As new deliveries increase later this year and next, the trend could become even more pronounced.’