Rent and Operating Trends Week of May 20th 2020

Up from the Pandemic Low: Leading Indicators Show More WoW Improvement

While coronavirus lockdowns are not over yet, as of May 20, all 50 states were starting to re-open to some degree, according to The Wall Street Journal. The East and West Coasts are re-opening more gradually.

As I mentioned in my last blog, the openings were already having a positive impact on our industry. During the week ending on May 20, all the major national performance metrics except for Net Effective Rent (NER) moved in the right direction on a week-over-week basis, according to Radix. That marked the first time that has happened since the pandemic began.

We seem to have bottomed out as far as declines in occupancy and leased percentage rates, and traffic and leases are gaining ground as well. NER, while still declining, experienced a smaller dip than it did during the preceding week.

If traffic and leases continue to improve, the impetus for rapid rent discounts and concessions might slow down as well.

Here are the notable takeaways from the week ending on May 20:

• Nationally, traffic and leases were up 13.8% and 13.3%, respectively, WoW. Those figures represent an accelerating improvement (during the week ending on May 13, the metrics increased by 8.7% and 6.6% WoW). On a year-over-year basis, leases were down only 11.6%, which is a major improvement from earlier in the pandemic, especially when considering these gains were made almost entirely while a majority of the markets were still in lockdown. Traffic was down 35.8 percent YoY.

• The national occupancy (92.90%) and leased percentage (94.56%) rates were up WoW for the first time since April 1. YoY, we are still behind in both metrics, but should this positive weekly trend continue, we will see the gap close on YoY numbers as well.

• As for national net effective rent, that came in at $1,762 in the week of May 20. That was down 0.8% from the preceding week (the WoW drop was 1.1% during the week of May 13). The YoY decline was 0.9% (the YoY drop was 0.8% during the week of May 13).

In terms of the 21 metropolitan statistical areas tracked by Radix, leased percentage rates were up WoW in all MSAs, except for Houston, Riverside, Calif., and San Francisco, with the largest increase occurring in Charlotte (62 basis points). Occupancy rates were a bit more mixed, with just over half the MSAs showing positive WoW growth, and Charlotte leading again with a 55-basis-point gain. Three MSAs are still ahead in YoY net effective rent: Charlotte, Dallas and Phoenix.