Rent and Operating Trends – Week of February 12th 2023

Key Takeaways – Data as of 02/12/2023

Traffic and Leases:

• Traffic and new leases signed were both unchanged last week.
• The pace of traffic and leasing acceleration that we saw in January was in line with the historic trend from recent Januarys. Even in 2020, before COVID rocked the industry, traffic and leasing in January followed a normal trend. Traffic and leasing growth has paused in February a few times in the past 5 years before accelerating again, so the flat performance last week does not necessarily indicate a slowdown in momentum for the prime leasing season.
• Traffic gains were geographically dispersed last week with Jacksonville, Boston, Minneapolis, Riverside and Salt Lake City taking the top 5 spots for week-over-week traffic growth.
• Chicago has moved into the top 3 for overall weekly traffic, displacing Dallas, which had been a top market for traffic for much of the last 6 months.

Occupancy:

• Occupancy was flat nationwide last week, holding at 94.33%.
• The significant traffic in San Jose may now be translating into occupancy, as market-wide occupancy increased 19 basis points last week alone. San Jose’s occupancy rate is 95.39%, the second highest of any market in the top 30 and one of only a handful of markets above 95% across the country.
• ATR ticked upward by 30 basis points last week, led by southeastern markets including Tampa, Nashville, Jacksonville and Miami. While ATR in these markets jumped quickly both on a weekly and annual basis, most of these markets maintain ATR levels below the national average.

Net Effective Rent:

• NER nationwide increased 10 basis points last week and has steadily grown throughout the early part of 2023.
• The national average NER is $1,875, and although it remains more than $50 below last year’s peak, I expect rent growth with bring the national average NER above its 2022 high in the coming months.
• Like occupancy, NER growth was strongest in San Jose last week as rents increased 60 basis points week-over-week and 6.2% year-over-year.