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Rent And Operating Trends – Week Of February 18th 2024

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Rent And Operating Trends – Week Of February 18th 2024

Picture of Chris Nebenzahl

Chris Nebenzahl

In the wake of a higher-than-expected inflation report, the theme from many Fed Governors last week was patience in determining when the first interest rate hike would be. The Consumer Price Index came in higher than many economists expected for January, which led to an equity market sell off and an increase in treasury yields. Both are indicators that the market expects the Fed to wait longer than previously anticipated before dropping interest rates. Long term inflation continues to come down however, and the annualized CPI fell to 3.1%.

The multifamily market had another strong week last week, as rents and occupancy rates rose in many markets across the country. The leading indicators, including traffic and leasing were mostly flat, but key operating metrics continue to put forth a strong showing through the first six weeks of the year. Occupancy has been the most consistent outperforming metric thus far, as demand continues to hold up against the pressure of new supply.

Key Takeaways – Data as of 2/18/2024

Traffic and Leases:

  • Traffic was flat at the national level last week, and new leases signed declined marginally. The leading apartment indicators started the year strong but have softened slightly in the past few weeks.
  • Reno and Portland led the growth rankings last week for traffic, with the Northern Nevada market picking up a half tour per property last week. Reno has emerged as one of the better performing markets in the nation. Occupancy is up 62 basis points from last year, traffic and leasing activity is growing quickly and rent growth in recent weeks has outperformed its peer markets.
  • While Pacific Northwest markets led the traffic rankings, Midwest markets Detroit and Minneapolis led the leasing growth rankings. Both markets added an additional 0.2 new leases signed last week, however their overall leasing activity remains below the national average by a significant margin.

Occupancy and ATR:

  • Nationwide occupancy increased two basis points last week and is roughly 50 basis points below its level from this time last year. Occupancy has been aided by continued job growth leading to strong demand. New apartment deliveries also tend to slow in the winter months, so we will be watching the occupancy numbers closely as the spring approaches.
  • Southern and Southeastern markets took the top five places in the weekly occupancy growth rankings as the Virginia, Tennessee and North Carolina markets bounce back. Willmington, NC and Memphis had particularly strong weeks as both markets added more than 10 basis points of occupancy.
  • Occupancy did not improve across the board in the Southeast, however. Columbia, SC, Huntsville, and Charleston were the three worst performing markets last week, and each market lost six basis points or more from their market occupancy rate.


Net Effective Rent:

  • Rents increased 10 basis points last week again driven by metros in the West and Northwest.
  • Reno and Seattle led all markets as rents grew 30 basis points in both cities. Sacramento also posted a strong week from a rent growth perspective.
  • On an annual basis, growth continues to emerge in several markets where supply pressure is not extreme. The pattern is less geographic, however, as growing markets are located across the nation. 16 of the 45 markets tracked by Radix Research have registered annual rent increases. Of those 16 markets, three are on the west coast, three are in the southwest, three are in the Midwest, two are in the northeast, two are in the mid-Atlantic, two are in the southeast and one is in Texas. As the nation recovers from the declines of the past year and overcomes the current supply wave, I expect this trend of sporadic outperformance to continue.

Revenue Per Available Unit:

  • RevPAU had another strong week as net effective rent and occupancy both increased. Seattle and Reno flipped places from the rent growth rankings with Seattle taking the nation’s top spot in this week’s RevPAU growth rankings.
  • Huntsville remains at the bottom of the RevPAU rankings on both a weekly and annual basis. The northern Alabama market maintains steady occupancy and ATR metrics, yet the traffic and leasing activity in the market are too low to support rapid supply growth.
  • Since RevPAU is a lagging indicator I would not expect the data to turn positive for much of this year. We may see RevPAU remain negative on an annual basis heading into 2025. Yet the slow momentum that is building is a good sight as the industry searches for a bottom and begins a new growth cycle.

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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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