By Dees Stribling, Contributing Editor
Carrollton, Texas–Rent growth for U.S. apartment properties was good in 2010, but it will be even better in 2011, according to projections by MPF Research, a division of RealPage Inc. MPF Research predicts a 5.1 percent jump in average rents nationwide, combined with an increase of 0.8 percent in occupancies, for revenue increases of 5.9 percent.
Effective rents climbed 2.5 percent during the past year, according to the Carollton, Tex.-based company. Monthly rents now average $1,029. During the fourth quarter of 2010, apartment occupancy reached 93.5 percent, up from 91.8 percent in late 2009.
Properties built over the past 20 years will drive rent growth in 2011, predicts MPF Research. While a number of lower-tier apartments remain vacant, better-quality units are essentially full once again, and they won’t face much additional direct competition from new deliveries in the coming year, since there won’t be many at all in 2011. Also, renters are unlikely to jump into buying a residence in the current housing climate, even though their rent might be going up.
“Another year of strong rent growth appears likely in 2012,” Greg Willett, vice president, research and analysis for MPF Research, tells MHN. “Pricing should continue to go up in 2013 to 2014, but at a slower pace because of increased apartment deliveries and a potential bump in the loss of renters to purchase.”
MPF Research forecasts that San Jose will be the top-performing metro apartment market in 2011, with revenues projected to surge 10.2 percent. The majority of that growth will come from forecast rent increases of 9.6 percent, but San Jose’s already-tight occupancy rate is projected to rise 0.6 percentage points to 97.1 percent.
Austin ranks as the second-strongest performer nationally, with MPF Research forecasting revenue growth of 9 percent; a rise in rents of 6.8 percent; and an improvement in occupancy of 2.2 percentage points to 95.7 percent. Apartment revenues are expected to jump about 8 percent during 2011 in Boston, New York, Denver and Washington, D.C., while increases should be up nearly 7 percent in San Francisco, Fort Lauderdale, Fla., Raleigh, N.C., and Baltimore.