Chart of the Week

Revenue per available (RevPAU) unit is a key metric in the multifamily industry that tracks the impact of both rent growth and occupancy for a given property, submarket or market. In recent months, rents and occupancy rates have both been declining, which has exacerbated the negative impact on RevPAU.

We’ve identified a leasing and occupancy trend that proved true once again in 2023. The spread between the leased percentage and the occupancy rate has peaked in the last week of July or the first week of August each of the past 5 years.

As we approach the end of the third quarter, we typically start to see a drop off in occupancy across the country. That down trend has already begun, and in some markets goes all the way back to late 2021.

As we approach the end of the third quarter, we typically start to see a drop off in occupancy across the country. That down trend has already begun, and in some markets goes all the way back to late 2021.

This week we are focusing on Boston, one of the better performing markets thus far in 2023. Looking back over the past two years, Boston’s rent growth and occupancy levels trailed the national average, as the market lagged its peers during COVID and in its immediate aftermath.

One of the most consistent headlines in multifamily over the past 24 months has been declining occupancy. Of the 33 MSAs tracked by Radix Research, none have experienced year-over-year occupancy growth.

Closing ratio is a key metric that tracks the leasing efficiency of a property or multifamily market. The closing ratio is the number of leases signed per week compared to the traffic seen at a given property. Over the past few years, closing ratios have followed a two peak and two trough per year trend.

Occupancy rates across the nation have been falling steadily for nearly two years after peaking in the fall of 2021. Some of the hardest hit markets include popular sunbelt markets with significant new development. Las Vegas, Atlanta, Phoenix and Salt Lake City have all seen their apartment fundamentals deteriorate in recent months, most notably occupancy and net effective rent.

Revenue per available unit (RevPAU) is the most comprehensive single statistic to assess apartment performance over time. Taking into account both net effective rent and occupancy, RevPAU provides the most concise view of earning potential at a given property.