DALLAS--(BUSINESS WIRE)--Axiometrics Inc., a provider of data and analysis on the apartment market, notes in its latest research that effective rents (rent net of concessions) and occupancy declined slightly in October, typical for the market as it heads into the fourth quarter. Nationally, effective rents declined 0.28% between September and October, similar to the 0.21% decline in October of 2010 but far ahead of the -0.73% and -0.63% growth rates in October of 2009 and 2008.
The national occupancy rate also declined slightly, from 94.07% in September to 93.83% in October. This trend is also seasonal and similar to the decline in October of 2010. Overall, occupancy is up 0.71% year-to-date.
“The market typically sees negative growth for effective rent and occupancy in the fourth quarter, and this year the rates are likely to be negative again, though much milder than for the average fourth quarter,” said Jay Denton, vice president of research for Axiometrics. “Year-to-date growth has slowed somewhat from our last forecast. We continue to expect a strong apartment market for 2012, but perhaps not as robust as previously forecasted.”
Effective Rent Growth
The year-to-date growth in effective rent, 4.85%, has fallen in line with where it was in October 2010, when it measured 4.91%. However, Axiometrics notes that sequential growth leveled off in August and September, thus full-year results for 2011 might not match previous forecasts. Still, if November and December results are similar to those in 2010, fourth quarter 2011 would rank as the third highest for effective rent growth performance since 2001 (just behind the fourth quarters of 2005 and 2010).
Asset Class Trends
The growth in what renters will pay, as well as the revenue that owners/operators can expect to receive, vary substantially by asset class, according to an index created by Axiometrics. Revenue growth, defined as the combined change in effective rent and occupancy growth each month, has been very similar for Class B and Class A assets at the national level since hitting a low in December of 2009. Across 264 asset class groups overall in 88 markets, Axiometrics’ research shows that San Jose and San Francisco claim the top four spots (not all are shown in table below), with both their A and B classes ranked at the top of the list. While it was not unusual that Class C assets were mostly at the bottom of the list, there were still a few surprises. For example, Class C properties in Austin, Durham, and Denver all ranked in the top 20, with Austin ranking number five overall. In addition, Class A properties in San Diego and Las Vegas were both in the bottom 20, with Class A Las Vegas properties bringing up the rear as the lowest ranked class overall. Other Class A markets ranked in the bottom 32 include Tucson, Tulsa, Montgomery, Mobile, and Augusta. The full table is available upon request.
| Top and Bottom Performing Asset Classes Based on October 2011 Revenue Index | ||||||||||||||||||||
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Oct. 11 |
Effective Rent | Occupancy Rate | ||||||||||||||||||
| Rank | Market | Class | Dec. 09 | Oct. 11 | Change | Dec. 09 | Oct. 11 | Change | ||||||||||||
| 1 | San Francisco, CA | A | 128.1 | $2,482 | $3,146 | 26.8% | 96.0% | 97.0% | 1.0% | |||||||||||
| 3 | San Jose, CA | B | 125.5 | $1,532 | $1,890 | 23.4% | 94.7% | 96.4% | 1.7% | |||||||||||
| 5 | Austin, TX | C | 124.6 | $579 | $666 | 15.0% | 88.1% | 94.8% | 6.7% | |||||||||||
| 6 | Savannah, GA | B | 124.3 | $767 | $901 | 17.5% | 90.6% | 96.0% | 5.4% | |||||||||||
| 8 | Boston, MA | A | 122.5 | $2,316 | $2,771 | 19.7% | 95.5% | 97.8% | 2.3% | |||||||||||
| 9 | Portland, OR | A | 122.3 | $972 | $1,166 | 19.9% | 93.2% | 95.2% | 2.0% | |||||||||||
| 15 | Durham, NC | C | 120.8 | $539 | $623 | 15.6% | 86.3% | 90.2% | 3.9% | |||||||||||
| 19 | Oakland, CA | A | 120.1 | $1,680 | $1,994 | 18.7% | 95.5% | 96.6% | 1.1% | |||||||||||
| 20 | Denver, CO | C | 120.0 | $591 | $682 | 15.4% | 90.7% | 94.5% | 3.8% | |||||||||||
| 31 | Minneapolis, MN | C | 118.2 | $769 | $892 | 15.9% | 93.7% | 95.6% | 1.9% | |||||||||||
| 34 | Charlotte, NC | B | 117.8 | $661 | $747 | 12.9% | 90.5% | 94.7% | 4.2% | |||||||||||
| 35 | Dallas, TX | A | 117.6 | $1,100 | $1,259 | 14.4% | 92.6% | 95.5% | 2.8% | |||||||||||
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National |
A | 113.2 | $1,254 | $1,391 | 10.9% | 93.5% | 95.5% | 1.9% | |||||||||||
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National |
B | 112.4 | $885 | $973 | 9.9% | 92.4% | 94.5% | 2.1% | |||||||||||
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National |
C | 109.6 | $663 | $709 | 6.9% | 88.8% | 91.1% | 2.3% | |||||||||||
| 233 | Riverside, CA | C | 104.2 | $822 | $839 | 2.0% | 92.1% | 94.1% | 2.0% | |||||||||||
| 239 | Atlanta, GA | C | 103.2 | $542 | $561 | 3.5% | 83.9% | 83.4% | -0.5% | |||||||||||
| 241 | Jacksonville, FL | C | 103.1 | $579 | $579 | -0.1% | 80.1% | 82.5% | 2.4% | |||||||||||
| 243 | Columbus, OH | C | 103.0 | $465 | $474 | 1.9% | 87.6% | 88.6% | 1.0% | |||||||||||
| 246 | Fort Lauderdale, FL | C | 101.7 | $829 | $847 | 2.2% | 88.2% | 88.0% | -0.2% | |||||||||||
| 248 | San Diego, CA | A | 101.6 | $1,771 | $1,804 | 1.9% | 95.5% | 95.2% | -0.2% | |||||||||||
| 249 | Miami, FL | C | 101.4 | $828 | $840 | 1.4% | 93.4% | 93.4% | 0.0% | |||||||||||
| 253 | Virginia Beach, VA | B | 100.2 | $917 | $937 | 2.3% | 94.8% | 92.9% | -1.9% | |||||||||||
| 255 | Houston, TX | C | 100.0 | $537 | $528 | -1.6% | 84.7% | 85.8% | 1.1% | |||||||||||
| 261 | West Palm Beach, FL | C | 97.9 | $775 | $787 | 1.5% | 89.4% | 86.4% | -3.1% | |||||||||||
| 263 | Memphis, TN | C | 96.9 | $479 | $510 | 6.5% | 80.7% | 73.4% | -7.3% | |||||||||||
| 264 | Las Vegas, NV | A | 96.4 | $984 | $950 | -3.5% | 93.5% | 93.3% | -0.1% | |||||||||||
About Axiometrics
Axiometrics Inc. measures the performance of the apartment sector every month by surveying more than 16,500 properties and 4.4 million units. Learn more at www.axiometrics.com or by calling 214-953-2242.