Rent and Operating Trends Week of August 21st

Key Takeaways – Data as of 08/21/2022

Traffic and Leases:

• Traffic fell nationwide last week, while new leases signed remained unchanged from the prior week.
• Both traffic and new leases signed are below their averages from this time last year, however the gap has narrowed over the past few months.
• Despite declining occupancy, Houston led the nation in both traffic and leases signed last week, another indication that new supply is once again playing a role in softening apartment fundamentals.

Occupancy and Leased:

• Occupancy and leased percentages fell 16 and 14 basis points respectively last week at the national level. After spending much of the past few years above the long-term average, national occupancy will likely fall below 95% in the coming weeks.
• Las Vegas, Houston, and Phoenix have some of the weakest occupancy rates in the country as new supply, increased cost of living and a return to the office for some companies has led to elevated vacancy in the once hot sunbelt markets.
• In contrast, markets such as New York and California that have been historically challenging to build in, maintain some of the highest occupancy rates in the nation. New York City, San Diego and San Jose all have occupancy rates well above 96.5%. As the multifamily market returns to normal, new supply will once again become an important factor to monitor in relation to occupancy.

Net Effective Rent:

• Nationwide NER was unchanged last week. The national average rent is $1,921.
• Rapid deceleration continues across much of the sunbelt and mountain region. Rents in Las Vegas and Denver declined 30 basis points and 20 basis points respectively, last week, posting the weakest rent performance of any market in the top 30. Las Vegas rents fell 40 basis points year-over-year, and the once rapidly growing metro is now one of the first to report negative annual rent growth.
• Miami and Tampa, some of the fastest growing metros in the country last year, have decelerated dramatically. While annual growth for the Florida metros remains around 10%, weekly and monthly rent growth has gone negative. I expect both markets to end 2022 with negative annual rent growth.