First half net effective rent cooled from last year, as the average property nationwide has posted a two percent rent increase thus far in 2023.
The first half of 2023 is behind us and before we shift our focus to the third and fourth quarters of this year, we look back on multifamily performance from January through June. We will discuss the key metrics tracked by Radix, with all data coming directly from our clients and their operating platforms. The data included in this report is as of the last week of June.
The first half of 2023 has been marked by economic volatility, major regional bank failures, continued monetary tightening and ample talk of an upcoming recession. However, the overall economy remains on steady footing.
Orlando has recently been overshadowed by Tampa and Miami, as its southern and western neighbors dominated migration and property performance headlines throughout 2021 and 2022. Orlando performed well during that stretch, however its heavy reliance on tourism and hospitality has led to a more volatile period both from an employment perspective as well as a multifamily perspective.
At the halfway point of 2023 we have seen a meaningful bifurcation at the market level in multifamily performance. While national rent growth is slower than expected at the start of the year, there are certain markets experiencing strong rent growth. This week’s chart of the week focuses on the top markets for year-to-date net effective rent growth.
In this week’s Radix Chart of the Week, we examine the relationship between leased percentage and occupancy rate. In recent years, the variance between leased percentage and occupancy has bottomed out in late Q4 or Q1, before rising dramatically during the prime rental season.
As we approach the end of the second quarter there will be two key economic indicators released this week. The final estimate of Q1 GDP will be released on Thursday. First quarter GDP had initially been reported at a 1.1% growth rate but was revised upward to 1.3%.
While most markets set records for rent and occupancy performance in 2021 and 2022, Miami led them all in net effective rent during one of the strongest periods in the history of our industry. However, as demand has cooled nationwide, the south Florida MSA’s rent and occupancy performance has also cooled.
The U.S. economy rests on solid footing following last week’s Fed meeting. Interest rates remained flat last week, and while the Fed may yet raise rates once or twice more this year, the end of the tightening cycle is clearly in view. Inflation continues to slow down, yet the consumer remains strong.
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