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Rent And Operating Trends – Week Of January 21st 2024

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Rent And Operating Trends – Week Of January 21st 2024

Chris Nebenzahl

Chris Nebenzahl

The Radix team will be at the NMHC annual meeting next week and we would love to see you there. If you’ll be in attendance please reach out. We will be sharing market insight and forecasts as well as upcoming product updates. We are also excited to open several new markets in Radix Research. Our coverage continues to expand across the southeast, Midwest and West Coast, and new markets include Detroit, Columbus, Sacramento, and Huntsville among others.

Evidence of a strong economy continues to permeate the closing reports from 2023. December retail sales were very strong, increasing 0.6% monthly and 5.6% on an annually. The 2023 holiday season was better than expected, proving that the American consumer is healthy and spending. Consumer activity drives nearly three quarters of GDP, and the strong consumer activity is a positive indication for fourth quarter economic output. Prices may be on the rise because of the strong spending, as we saw the December CPI increase faster than estimates. The Personal Consumption Expenditures Index, the measure of inflation preferred by the Federal Reserve, will be released on Friday, providing further indication of pricing pressure across the market.

The multifamily market had a strong week last week, posting gains for many of the leading indicators. Apartment performance in January has been better than expected thus far, and strong consumer activity will likely keep the sector moving forward. A recent article in the Wall Street Journal highlighted the challenges facing the for-sale housing market juxtaposed against the strong economy. This trend will support multifamily performance as for sale housing costs remain expensive, but economic strength endures.

Key Takeaways – Data as of 1/21/2024

Traffic and Leases:

  • Traffic and leasing both increased last week at the national level. The average number of leases signed per property is now in line with its early 2023 level, while traffic remains slightly below where it was a year ago.
  • 32 of the 45 markets tracked by Radix Research experienced an uptick in traffic last week, led by Riverside, CA, which saw traffic jump nearly a full tour per property last week alone. San Diego and Sacramento also posted strong weeks, as California metros took the top three spots in our weekly traffic growth rankings.
  • Leasing activity increased the fastest in Salt Lake City, Austin, and San Antonio, three markets in desperate need of growth. Plentiful new supply has hurt these markets; however demand seems to be holding strong.
  • The same cannot be said for another high supply market, Nashville. The Tennessee metro lost nearly a half lease per property last week and is averaging only two new leases signed per property each week. Given the intense supply pressure, any demand deterioration in Nashville will extend the underperformance that the market is already experiencing.

Occupancy and ATR:

  • For the third straight week national occupancy gained one basis point.
  • Minneapolis led all markets, picking up nine basis points last week. While annual growth remains negative, the recent increase propelled the Twin Cities metro near its occupancy level from last year.
  • Mid-Atlantic markets struggled last week as Baltimore and Virginia Beach occupancy fell the fastest. Both MSAs lost more than 10 basis points. However, overall occupancy remains healthy in the mid-Atlantic. Baltimore’s overall occupancy is 94.5% and Virginia Beach occupancy is 95.2%, both outpacing the national average by a meaningful margin.


Net Effective Rent:

  • Nationwide net effective rent grew four basis points, and the average NER was $1,815. Year-over-year rents are down 1.5%.
  • Greenville, SC posted a strong week, as rents increased 1% over the past seven days. Baltimore, Memphis, and Nashville also posted steady gains in the past week.
  • Rents fell the fastest in New York last week, as average NER slipped 60 basis points. San Diego and Chicago rents also fell last week, however the three markets with the lowest performance last week all maintain healthy annual rent growth.
  • One potential sign of strength for rent growth is that the largest gains are now larger than the largest losses. For a number of months, the weakest performing markets recorded losses far greater than the gains in the top performing markets. That has reversed in recent weeks.

Revenue Per Available Unit:

  • Revenue per Available unit also grew four basis points nationwide last week. The national average RevPAU is $1,700.
  • Over the past three years RevPAU has increased 17.4% as apartment revenues across the nation have experienced a generation shift. Despite the challenges of the last year, long-term growth remains very healthy.

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