Also contained in the report was the finding that the fourth-quarter occupancy rate reached 95 percent for the first time since 2000, and that among the top 50 metropolitan areas, Portland, Ore., tallied the strongest rent growth at 12 percent.
In the fourth quarter of last year, annual effective rent growth of 4.7 percent represented a seven-basis-point increase from the year-earlier figure. However, it was lower than the 5.2 percent of the third quarter of 2015.
The fourth-quarter rate is the highest year-end figure since 2005. Then, effective rent growth stood at 5.8 percent.
For five consecutive quarters, rent growth has attained levels of 4.7 percent or higher, despite a three-quarter streak of at least 5.0 percent coming to an end during that period. Annual rent growth has never been at 4.7 percent or higher for such a lengthy period in the two-decade history of Axiometrics.
Continuing a trend of negative rent growth at year end, quarter-over-quarter effective rent growth was minus 0.6 percent in the fourth quarter of 2015. That represented a 32-basis-point slide from the 0.3 percent reported in fourth quarter 2014. What’s more, fourth quarter was the only quarter in 2015 in which the rent growth rate fell from the corresponding quarter in 2014. Seasonal factors tend to leave quarter-to-quarter rent growth negative in fourth quarters.
In the fourth quarter of 2015, annual national rent stood at $1,244. That marked a $56 hike vis-à-vis the fourth quarter of 2014, when the average was $1,188.
“Quarters one through three were the most robust period we have seen since before the Great Recession,” Jay Denton, Axiometrics senior vice president of analytics, said.
“Much of the fourth-quarter moderation can be attributed to several Western markets that experienced double-digit rent growth for most of the year, but could not sustain that pace,” he continued. “Those markets remain quite strong at 6 percent and higher rent growth. Axiometrics forecasted those metros to moderate, and they did late in the year. As expected, they remained among the top markets for rent growth despite the deceleration late in the year.”
Speaking of Western markets, in the third quarter, Portland, Ore., supplanted Oakland as the metropolitan area with the highest annual rent growth among Axiometrics’ top 50 markets, and retained that status in the fourth quarter.
Also in the fourth quarter, seven of the top 25 metros were in California. The third was Sacramento, and the sixth was San Diego. Florida, meanwhile, placed five metros in the fourth-quarter top 25, Orlando among them in fifth place.