Rent and Operating Trends – Week of October 15th 2023

Key Takeaways – Data as of 10/15/2023

Traffic and Leases:

• Struggling southwestern markets led the nation in traffic growth last week, a positive change for a region that has struggled recently. Las Vegas added nearly a half tour per property, followed by San Antonio, Albuquerque and Colorado Springs.
• Las Vegas also had a strong leasing week, picking up nearly a third of a lease per property compared to the week before. Its conversion ratio is 35% and its leasing activity is one of the strongest in the nation. With market occupancy at 92.7%, any growth in traffic and leasing is a welcome sight for local owners and operators.
• On the contrary, traffic fell nearly a half tour per property last week in Austin. The market has been hit hard with new supply and softening demand, leading to weak occupancy and the largest rent decline in the nation. Further deterioration of demand will be a major challenge for this market.

Occupancy and ATR:

• Nationwide occupancy fell another 6 basis points, falling below 94% for the first time in years. Occupancy declines were seen in all but four markets last week.
• The southwest outperformed from an occupancy perspective as well last week. The traffic and leasing led to a three basis point increase in occupancy in Las Vegas, while Colorado Springs and Salt Lake City also saw occupancy increase modestly.
• The small gains in a handful of markets pale in comparison to the significant declines in others. 8 markets tracked by Radix Research saw occupancy fall by 10 basis points or more last week, led by San Antonio, whose occupancy fell 20 basis points.
• ATR increased modestly nationwide, and the average property has 15 units available to rent.

Net Effective Rent:

• Net effective rents fell 20 basis points last week and the national average rent is $1,858 per month. Rents have fallen roughly $40 from their early July peak.
• Along with their occupancy declines, San Antonio led all markets with NER falling 90 basis points last week alone. Miami also had a tough week from a rent perspective with NER declines matching those of San Antonio.
• The best performing market on a weekly basis was Portland, whose rents were flat last week. All other markets tracked by Radix Research saw rents decline. Despite the weekly declines 11 markets maintain positive year-over-year NER growth.

Revenue Per Available Unit:

• RevPAU fell 23 basis points last week, as the impact of falling occupancy and rents continues to hurt RevPAU.
• San Antonio RevPAU had the steepest decline in the nation, falling 110 basis points last week, followed by Miami, with a drop of 80 basis points.