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Rent And Operating Trends – Week Of February 11th 2024

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Rent And Operating Trends – Week Of February 11th 2024

Picture of Chris Nebenzahl

Chris Nebenzahl

It was a quiet week in the economy last week, and most indicators continued their slow and steady growth. All eyes will be on inflation this week from a quantitative perspective. From a qualitative perspective, many of the Fed Governors are slated to speak at various events.

While I don’t suspect any specific commentary on the timing of interest rate cuts, the tone and sentiment of each Governor’s comments will be noteworthy. Later this week, the homebuilder sentiment as well as housing starts and building permits data will be released, which should provide additional context into the strength of the housing market. Multifamily fundamentals had another strong week last week, led mostly by demand indicators.

Occupancy continues to grow in 2024, and the number of units available to rent is improving as well. Traffic picked up modestly last week as did net effective rent and revenue per available unit (RevPAU). The only declining metric was leases signed, which fell slightly, but remained in decent position halfway through the first quarter.

Key Takeaways – Data as of 2/11/2024

Traffic and Leases:

  • Traffic edged upwards last week, and the average property nationwide is seeing nearly seven and a half tours per week.
  • Southeastern markets led the weekly gains, as Columbia, SC, Memphis and Chattanooga all saw traffic jump meaningfully. Atlanta, Charlotte and Raleigh were also in the top ten markets for traffic growth.
  • Memphis and Chattanooga were also the leaders in the leasing growth rankings last week. Chattanooga apartment fundamentals are strong across the board, as many of their peer markets in the Southeast have struggled recently. Occupancy in the Tennessee market is nearly 95%, and the average number of units available to rent is among the lowest in the nation.

Occupancy and ATR:

  • Nationwide occupancy picked up two basis points last week as the occupancy rate climbs closer to 94%.
  • Columbia, SC and Nashville posted strong gains last week, with each market picking up at least 10 basis points of occupancy. The growth in Nashville is particularly impressive, given its recent performance and continued supply pressure. Despite more than a quarter of the market’s existing stock currently under construction, the stabilized occupancy rate remains only 90 basis points below its level from a year ago.
  • ATR, or the number of units available to rent, continues to improve. On average, apartments nationwide have 14 units available over the next 60 days, marking an 18% improvement year-over-year.

Net Effective Rent:

  • Net effective rent increased 10 basis points last week but remains down 1.6% from a year ago.
  • Charleston had the best week of any market last week, as rents jumped 1%. The coastal South Carolina market is also one of the best performing Southeastern markets, as its development pipeline has not put the same stress on rents and occupancy as other peer markets in the Carolinas, Georgia, Florida and Tennessee.
  • 17 of the 45 markets tracked by Radix Research have posted annual rent gains, as the nationwide rent story continues to bifurcate. Performance remains weakest in markets with high supply, while moderate to low supply markets have returned to long-term average rent growth.

Revenue Per Available Unit:

  • RevPAU also had a strong week as both NER and Occupancy increased.
  • Charleston, Boston and Reno were the top performing markets last week, as each market’s RevPAU increased by at least 60 basis points.
  • The weakest performing markets were Greenville, SC, San Antonio and Albuquerque.

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Picture of Chris Nebenzahl
Chris Nebenzahl
Chris Nebenzahl is the Director of Economic Research at Radix, where he oversees all macroeconomic and multifamily market analysis. Chris has 15 years of multifamily experience in data analytics, research, asset management and acquisitions. Prior to his time in the multifamily industry Chris was a portfolio manager at Bank of New York, focusing in the government and commercial fixed income sectors.
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