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Rent And Operating Trends – Week Of January 28th 2024

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Rent And Operating Trends – Week Of January 28th 2024

Picture of Chris Nebenzahl

Chris Nebenzahl

Will you be at NMHC this week? If so, come find us. Blerim Zeqiri, Brad Cribbins, Jay Denton, and I will be at the Apartment Strategies conference and the annual meeting. We would love to share what 2024 has in store for Radix and the multifamily industry.

The economy chugs along with a strong foundation in employment and improving inflation metrics. The Personal Consumption Expenditures Index was released on Friday showing that prices have increased 2.9% from a year ago. The Fed prefers to watch the PCE, and this measure now sits within the target range for policy makers, as they mull the next step on interest rates. Fed officials will vote on monetary policy at their meeting this week and while few expect a change in rates at this meeting, many economists are speculating when the first rate cut will come. I believe the Fed will start easing monetary policy in the second quarter, but softer jobs numbers or lower inflation reports may accelerate the process for the first rate cuts since COVID.

Property fundamentals continue to improve in the short term, while annual growth remains negative for most key metrics. Occupancy is showing a similar trend to last year, and is holding firm, despite expectations of continued declines. Traffic and leasing are improving, indicating a potential early start to the 2024 leasing season.

Key Takeaways – Data as of 1/28/2024

Traffic and Leases:

  • Nationwide traffic and leasing both increased, as the average property saw almost 7 tours last week. With traffic and leasing both increasing at similar cadences, the closing ratio remains at 33%.
  • San Jose picked up nearly a full tour per property last week, bringing its average traffic above 10 tours per property. It is the only market in the nation to average double digit traffic.
  • Texas and Florida markets dominate the rest of the top 10 traffic markets as the demand in the southeast and southwest continues. All the top traffic markets by absolute tours per week are also among the top markets for traffic growth. This bodes well for the sunbelt in the coming months.
  • Leasing also gained traction last week. Austin leads all markets with nearly three leases signed per property per week, and all the top 10 leasing markets are in the sunbelt.

Occupancy and ATR:

  • Occupancy continued its slow and steady growth trend adding another basis point last week. The national occupancy rate is 93.7%.
  • Given its heavy traffic, its no surprise San Jose led the nation, picking up 17 basis points of occupancy alone. Minneapolis, Riverside and Midland, Texas also improved, with occupancy jumping at least 10 basis points last week.
  • Memphis and Colorado Springs struggled, losing 34 basis points and 17 basis points of occupancy respectively.
  • Long-term occupancy is improving, as 5 of the markets tracked by Radix Research have registered annual occupancy gains, compared to 2 markets at the end of 2023.
  • ATR is also improving, and the average apartment community nationwide has 14 units available to rent in the next 60 days. This marks a 60-basis point improvement from the week prior and a 17.9% improvement from last year.


Net Effective Rent:

  • NER was flat last week and is down 1.6% on an annualized basis. Nationwide, the average NER was $1,814.
  • Smaller markets led the weekly gains as Virginia Beach and Columbus, Ohio led the growth rankings. Nashville also posted strong gains last week, which was a welcome sight for operators in the Music City. Rents are down more than 4% from last year in Nashville and new supply continues to weigh on the market, especially in the urban core.
  • San Diego struggled last week as rents fell 50 basis points. The move pushed rents negative on an annual basis for the first time in months. Rounding out the bottom 5 markets for weekly rent performance were Raleigh, Atlanta, San Antonio and Salt Lake City, all markets that have struggled immensely in the past year with new supply pressure.

Revenue Per Available Unit:

  • Revenue per Available Unit picked up one basis point last week as occupancy drove the modest growth.
  • Huntsville, Alabama, one of the recently opened markets in Radix Research, is one of the markets with the highest new supply as a percentage of stock. As a result, both rent and occupancy rates are down in the Northern Alabama market, leading to an annual RevPAU loss of 10.5%.
  • Midland, Texas is the fastest growing market in the country, with annual RevPAU up 7.7%. The growth in U.S. oil exports has had a huge impact on the Permian Basin market, and continued energy exports will lead to strong multifamily performance.

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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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