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Occupancy Rises in All but 6 Markets, as Renewal Activity Continues

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Occupancy Rises in All but 6 Markets, as Renewal Activity Continues

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Chris Nebenzahl

As the U.S. economy continues to defy expectations both from a strong employment market and a persistent inflation perspective, economists are asking what is driving these trends. Many point to a recent report from the Congressional Budget Office indicating that more than 3 million immigrants entered the U.S. last year, well above recent years and projections. The labor force needs workers, as the data has shown, with more and more jobs being created, while the unemployment rate has stayed steady and even increased slightly. However, with more jobs being created and wages increasing modestly, more workers are able and comfortable consuming. This is leading to elevated inflation figures and likely a delay in any interest rate cuts from the Federal Reserve.

Apartment fundamentals are steadily improving, although the divergence between the leading indicators; traffic and leasing, and the secondary indicators; occupancy and rent, is continuing to widen. Leading indicators have been increasing slowly this year, while occupancy has been growing at a much steadier pace. The number of units available to rent is also improving and is the only key indicator tracked by Radix that is in better shape than it was a year ago. This data continues to point toward the notion that residents are renewing leases at a higher rate, shopping around for fewer apartments and staying put, after several years of elevated movement.

Key Takeaways – Data as of 4/14/2024

Traffic and Leases:

  • Traffic ticked up minorly last week and leasing was flat nationwide, leading to a closing ratio of 31%. Both traffic and leasing remain well below their levels from April 2023.
  • San Jose returned to the top of our traffic rankings, as the south Bay Area metro averages 10.6 tours per property per week. However, all the traffic is not leading to leases, as properties are only averaging 2.1 new leases signed each week. The metro closing ratio of 19.8% is among the lowest in the country.
  • Smaller markets including Midland, Jacksonville, Colorado Springs and Columbia, SC have the highest closing ratios in the nation. Despite varying supply demand balances in these markets, they remain among the most efficient in converting tours to signed leases.
  • Sunbelt markets maintain the highest leasing activity as we progress through the leasing season. Houston, Orlando, Jacksonville, Atlanta and Phoenix all average 3 or more new leases signed per property per week.


Occupancy and ATR:

  • The national occupancy rate increased 2 basis points last week and currently sits at 93.9%.
  • Only 6 of the 45 markets tracked by Radix Research lost occupancy last week, indicating that the occupancy gains are geographically diverse.
  • Wilmington, NC led all markets last week, picking up 35 basis points of occupancy. The coastal North Carolina market is in good shape with steady growth across key indicators.
  • As a sign of overall occupancy improvement, 7 markets now have higher occupancy rates than a year ago. The geographic range is widespread, as markets from Seattle to Washington, DC to Minneapolis have all reported improved occupancy. Even recently struggling markets like Salt Lake City and Las Vegas have stronger occupancy than last year.


Net Effective Rent:

  • NER increased 10 basis points last week but remains down 1.5% on a year-over-year basis.
  • The momentum in Midland, TX seemingly cannot be stopped, as the Permian Basin MSA once again led our weekly and national rent growth rankings. Rents increased 1.6% last week and 9.3% year-over-year.
  • Chicago is growing again after a slow start to the year. Rents jumped 50 basis points last week and crested 3% annual rent growth.
  • The fastest weekly rent gains are being seen in the most expensive markets. Of the top 10 priciest metros, rents increased in 9 of them last week. Only Los Angeles, where rents fell 40 basis points, reported a weekly decline.


Revenue Per Available Unit:

  • RevPAU also increased 10 basis points last week as the combined effect of growing secondary indicators occupancy and NER pushed the revenue per available unit upward.
  • Nationwide RevPAU is $1,702 down from its all time high of $1,872 in July 2022, however recent trends have stabilized and RevPAU is showing signs of steady growth in 2024.
  • Supply will continue to be the driving factor behind revenue performance, as the weakest RevPAU markets on an annual basis remain the sunbelt markets with the heaviest concentration of new deliveries.

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