Rent and Operating Trends – Week of January 22nd 2023

Key Takeaways – Data as of 01/22/2023

Traffic and Leases:

• Traffic picked up in all but two of the top 30 MSAs last week, an early positive indication for a strong rental season.
• Nashville, Dallas, Houston and Denver led the nation in week-over-week traffic increases. While the Texas markets had elevated traffic for most of 2022, Denver and Nashville fell back to the middle of the rankings for most key operating metrics. These were two of the best performing markets prior to COVID-19 and have dealt with cost of living and new supply challenges. However the lifestyle amenities and business friendly climate remain in both markets, which could lead to a resurgence of growth in the coming year.
• New leases signed reflected a similar pattern, with only one MSA, Baltimore, signing fewer leases on average last week than the prior week. Nashville and Denver were also in the top 3 MSAs for new leases, followed by Jacksonville and Phoenix. A pickup in leasing activity would be a welcome sight in Phoenix as it struggled last year, but the MSA remains attractive overall as in-migration continues.

Occupancy:

• Nationwide occupancy fell one basis point and the pace of declines has been slowing in recent weeks.
• Occupancy dropped in roughly half of the top 30 MSAs, led by Salt Lake City and Charleston, where occupancy fell 19 basis points and 15 basis points respectively.
• ATR also improved in about half of the top MSAs as unit availability is starting to drop. This will likely lead to higher occupancy in the coming weeks and months.

Net Effective Rent:

• NER grew 10 basis points nationwide last week, marking one of the first national increases since last summer.
• The biggest gains were seen in Baltimore and San Antonio, where rents popped 60 basis points.
• I expect rent growth to be mixed for the next few weeks before beginning a steady upward climb through late Q1 and through Q2.