MPF Research Confirms Strong Occupancy, Rental Growth for U.S. Apartment Sector
- Oct 03, 2011
Carrollton, Texas—As a class of real estate, there’s no question that apartments are hot. That’s the takeaway from the latest quarterly report by MPF Research, a division of RealPage Inc., which found (among other things) that the national apartment occupancy rate climbed 0.6 percentage points during the past three months.
The U.S. average occupancy reached 94.8 percent as of the third quarter of 2011, up from 93.8 percent a year ago and from 91.8 percent when the market’s performance bottomed in late 2009, according to the report. While occupancy isn’t yet at an all-time high, the rate has moved a little ahead of the average level recorded over the course of the past decade or so. With market conditions such as these, it doesn’t take much new demand to surpass the small amount of new supply coming online.
The report also noted that the rise effective rents was 1.6 percent in the third quarter compared with the second, while the year-over-year increase was 4.2 percent. That’s just a national average, however. Some places vastly outdistanced the national pace in rental-rate increases.
San Francisco and neighboring San Jose, for instance, experienced the nation’s most rapid metro-level rent growth between third quarter 2010 and third quarter 2011. Year-over-year, rents surged 13.4 percent in San Francisco and 13.1 percent in San Jose. A number of other large markets also recorded rent growth between 5 and 8 percent on an annual basis. Rates jumped 7.7 percent in Oakland and 7.3 percent in Seattle, while growth registered at 6.9 percent in Austin, 6.6 percent in New York and 6.2 percent in Minneapolis.
Not quite strong enough to rank among the nation’s rent-growth leaders, southern California is the spot to watch over the next few months, according to MPF Research. In particular, Los Angeles emerged as one of the nation’s out-of-nowhere stars for apartment revenue growth during the third quarter of 2011, the report said. Demand for more than 15,000 apartments in Los Angeles during the third quarter pushed the metro’s occupancy rate up 1.5 percentage points to 96.4 percent. Effective rents rose 2.1 percent during the past three months, taking the annual increase to 4.8 percent.
MPF Research anticipates that overall revenue growth for apartments in 2012 will look very similar to the results posted in 2011. Occupancy is expected to climb another half percent to 1 percent, while rents are forecast to again rise between 4 and 5 percent.