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Rent And Operating Trends – Week Of February 25th 2024

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Rent And Operating Trends – Week Of February 25th 2024

Picture of Chris Nebenzahl

Chris Nebenzahl

The 2024 presidential election is about 8 months away and political and fiscal issues are beginning to take center stage for the American consumer. The economy remains strong with steady GDP growth, a tight labor market and generally softening inflation, but issues including a government shutdown, international aid and foreign policy are becoming focal points. With a highly polarized populous I would not expect any radical change regardless of the outcome of the election, but there will certainly be significant discourse surrounding both candidates and the economy in the months to come.

Multifamily fundamentals are largely apolitical as well. While there is some discussion at the local level surrounding rent controls and other regulations in our industry, I would be surprised to see any sweeping national changes that would prohibit the free market from governing. Supply and demand are still driving apartment performance, with the current supply wave continuing to impact fundamentals in most markets.

Key Takeaways – Data as of 2/25/2024

Traffic and Leases:

  • Traffic increased modestly at the national level and properties averaged seven and a half tours per week. Despite the slight increase, traffic remains a half tour below its level from a year ago.
  • Detroit led all markets picking up nearly a full tour per property last week. The midwestern market still has a long way to go however, as it trails its 2023 traffic level by more than two tours per property.
  • Nashville also had a great week last week, bringing its annual traffic count above last year. This is a strong indicator for a market that has been mired by underperformance for months.
  • Nationwide leasing picked up as well as it nears the activity seen this time last year.
  • Baltimore and Nashville were the two fastest growing markets from a leasing perspective last week.

Occupancy and ATR:

  • Occupancy was flat last week as the national occupancy rate sits at 93.75%.
  • Another midwestern market, Minneapolis, led the weekly growth, as occupancy gained 16 basis points.
  • Roughly half of the 45 markets tracked by Radix Research saw flat or increasing occupancy, a positive sign as we approach the spring rental season. On an annual basis, seven markets have experienced occupancy growth, marking a significant change from the second half of last year, when all markets were negative year-over-year.
  • ATR has shown modest growth over the past year, and the average community has 15 units coming available over the next 60 days.

Net Effective Rent:

  • Net effective rents fell four basis points last week, and the year-over-year rent decline remains at 1.5% nationally.
  • High supply markets in the southeast saw the largest declines last week, led by Greenville, Huntsville, and Nashville. While Nashville is showing signs of growth in leading indicators including traffic and leasing, which could lead to rent stabilization in the coming months, Greenville and Huntsville have low traffic and leasing figures. Their market corrections could take longer as the supply wave continues.
  • The fastest growing NER markets last week were Baltimore, Reno, and Boston. It is worth noting that the strongest markets on a weekly basis are among the markets with the largest annual rent growth as well. The bifurcation among markets in terms of property performance continues to expand.

Revenue Per Available Unit:

  • RevPAU also fell four basis points last week with Greenville and Huntsville again falling the fastest among markets tracked by Radix Research. Columbia, SC was the third weakest market as both rent declines and occupancy losses weigh on the small southeastern MSAs.
  • Reno and Portland were the two fastest growing markets as the western MSAs look to recover RevPAU losses over the past year. Portland has been a sluggish market for some time, but the RevPAU growth is reflective of both rising occupancy and increasing rent, a good indicator for the city moving forward.

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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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