Posted December 19, 2012 by RentJungle
Countering the typical seasonal trend, annual effective rent growth for the apartment market increased from 3.60% in October to 3.72% in November according to the latest data from Axiometrics Inc., the leading provider of apartment data and market research. Annual occupancy growth also increased by 48 basis points (bps), making November the sixth consecutive month with an increase, though on a sequential basis there was a decline in the occupancy rate from October to November. Axiometrics also notes how the average square footage for new apartment construction is decreasing, reversing a trend that reached its peak at an average 1,008 square feet for properties built in the 2001-2005 timeframe. Still, while the current average of 982 square foot for properties in lease-up is lower than in recent years, it still has a ways to go before dropping to the 834 square foot average for properties built from 1981-1985, according to Axiometrics.
"As we believed would be the case at the beginning of the year, Class C properties have led the way in both effective rent and occupancy growth throughout the year, and helped lead a turnaround in momentum since August," said Ron Johnsey, president of Axiometrics. "In addition, while many coastal areas and the top Texas markets continue to lead the nation in effective rent growth, it is interesting to note that for the first time in four years Las Vegas posted positive annual growth during November."
Monthly, Year-to-Date, and Annual Effective Rent Growth and Occupancy
The national annual effective rent growth increase from 3.60% in October to 3.72% in November reversed the declines recorded for each month from April to October. Most of the increase can be attributed to Class B and Class C properties. Class B properties increased from a 3.6% annual effective rent growth rate in October to 3.8% in November. Class C properties performed even better, increasing from 4.0% in October to 4.2% in November. Since reaching a peak growth rate of 4.8% in May, Class A properties continued their slowdown, growing at only a 3.6% annual rate in November.
The national occupancy rate decreased slightly in November, declining from 94.43% in October to 94.26% in November. This decline was quite close to the declines recorded in November 2011 and 2010. However, overall monthly sequential growth the past few months has been higher than the comparable months of 2011, leading to an improvement in year-over-year changes and an increase in the annual occupancy growth rate from 20 bps in May to 48 bps in November. Once again, Class C properties led the way with a 115 bps increase, thus raising their occupancy to 92.5% in November. Class A properties remain the highest occupied, however, at a rate of 95.2%.