Year-End Brings Mixed Results for U.S. Apartment Industry

Happy New Year! I hope you all got through the incomparable 2020 OK – here’s hoping that 2021 goes much better for us all.

According to data from the Radix database of close to 5 million apartment homes nationwide, last year ended with mixed results for the apartment industry. For example, during the seven-day period ending on Dec. 27, traffic was down slightly (by 2.8%) on a year-over-year basis, while leases were up by 12.2%. The increase in leases is mainly due to the creativity and technology operators are using to do more with less traffic, such as virtual tours.

On the other hand, the national occupancy rate was down 0.1% YoY, but the leased percentage rate had risen by 0.2%. So, frankly, most of the national operating metrics are not down a whole lot from their pre-pandemic highs.

However, this doesn’t mean that certain metros haven’t experienced major turbulence.

For instance, occupancy rates decreased YoY in San Jose (-2.2%), Seattle (-1.7%), and San Francisco (-1.1%) during the week ending on Dec. 27. But those rates are down even more considerably when one takes into account only downtown areas and excludes suburbs and exurbs. Some core downtown areas across the country were down as much as 10% in occupancy throughout the year.

The national net effective rent (NER) was certainly one metric that unequivocally decreased YoY (-8.9%) during the week ending on Dec. 27. This is as steep a drop as we’ve seen since the pandemic hit in mid-March.

As it relates to NER, the impact is still uneven, with San Francisco down 23.1%, Seattle down 21.4% and San Jose down 21% YoY on Dec. 27. The majority of the markets tracked by Radix were down by single digits YoY. But the clear YoY winners were the four markets that have been positive the entire year: Riverside, Calif. (7%), Tampa (4.6%), Phoenix (4.2%), and Las Vegas (2.5%). As we have stated previously, this is a major reversal of fortune from the last downturn, when these were some of the most negatively impacted markets in terms of rents and occupancy. All four metros are also leading in occupancy and leased percentage. 

In terms of NER performance by floorplan, across the country studios were down 16.5% YoY, while one-bedrooms were down 10.5%, two-bedrooms down 7.2% and three-bedrooms down 5.4%. There is a clear trend in migrating towards larger units as people have been spending most of their time inside their homes. But many urban properties, which as stated previously are underperforming, have a higher concentration of smaller units. This creates a double negative impact on core urban communities. 

Key Takeaways – Data as of 12/27:

  • Traffic and Leases: traffic was down 2.8% YoY. This is much improved from the beginning of the pandemic when traffic was down approximately 75%. Leases per property were more or less on par with one year earlier and were up 0.2% YoY.
  • Occupancy and Leased Percentage: Occupancy was down 0.1% YoY, and Leased Percentage was up 0.2% YoY.
    • Riverside closed the year with the highest occupancy of any metro at 97.21%, followed by Las Vegas (96.11%) and Phoenix (95.56%). 
  • NER was down 8.9% YoY. San Francisco (-23.1%), Seattle (-21.4%), and San Jose (-21.0%) declined the most. Riverside, CA (7%), Tampa (4.6%) and Phoenix (4.2%) led the country in NER growth for the year.

Rent & Trend Report: August 9th
Apartment Market Showing Slight Dips in Operating Statistics

With the coronavirus pandemic continuing to rage in many parts of the country, the week ending on Aug. 9 showed most of the major apartment metrics experiencing slight declines, according to Radix data.

For example, the average apartment community in the U.S. had a traffic number of 9.37 leads, down from 9.54 leads during the preceding week. Also, the average property signed 3.24 new leases, a dip from 3.43 new leases the week before.

Meanwhile, the national occupancy and leased percentage rates were essentially flat on a week-over-week basis, while the metrics’ year-over-year deficits continue to shrink.

Unfortunately, while the national net effective rent was also slightly down WoW, its YoY gap is growing.

Here are some of the specific numbers from the week of Aug. 9:

  • Nationally, traffic and leases were down WoW by 2.4% and 4.7%, respectively. 
  • Traffic was down 15.7% compared to the same time last year; that marked its lowest YoY gap since the pandemic hit in mid-March. 
  • Five metropolitan statistical areas – Orlando, Fla., Portland, Ore., San Diego, San Jose, Calif., and Seattle – had higher YoY traffic numbers. 
  • On a national basis, leases were up 2.9% YoY.
  • The national occupancy and leased percentage rates stood at 93.95% and 95.31%, respectively. 
  • Occupancy was unchanged from the preceding week, while leased percentage was down just a sliver – 0.1% – WoW. Both metrics also were down when compared to the same time last year – occupancy by 0.6% and leased percentage by 0.4%. 
  • Five MSAs showed YoY improvements in occupancy rates, with Riverside, Calif., leading the way with a 1.6% increase.
  • At $1,665, the national NER dipped just O.1% from the week before, but the number was down 8.1% from the same time in 2019. Of some concern, NER’s YoY gap continues to grow. 
  • As for individual markets, three MSAs saw YoY improvements in NER. Phoenix saw the biggest jump, with an annual increase of 1.8%.

Q&A with Jared Wicker, Director of Data at Radix

We were thrilled to welcome Jared Wicker to the Radix team last summer. Jared is an apartment industry veteran with invaluable experience in multifamily operations. He will play a critical role at our company as Radix expands its client base and meets the data needs of all of our customers. You may even recall reading his blog on the pitfalls of web scraping

To help you get to know Jared better, we recently sat down with him to get more of his thoughts on the multifamily industry, what excites him about being part of the Radix team and his favorite book of all time.

Tell us about your career before you joined Radix last summer.

Jared: I’ve been in multifamily my entire career.

I started off on the operations side. In 2008, I went to work for Colonial Properties. I began as a financial assistant to a VP of operations and then actually went and leased apartment communities, working onsite.

I then went to Alliance Residential as an operations analyst, which is where I met Blerim [Zeqiri, CEO and co-founder of Radix]. 

Later, I went to Wood Partners, and I was with them for five years in various roles. I started as an analyst in the asset management group and eventually ended up as the manager of operations analytics, where I built their business intelligence platform. 

Wood Partners was one of the first Radix customers, and I got to use the platform from the user side for a long time. I helped Radix innovate some of its reporting and how it fed customers’ data back out of the system. I was one of the ones who requested a data feed coming back out of the product so that I could use it to build my business intelligence system for Wood Partners.

I then moved to Waypoint Residential, helping them with reporting and operations and building out their technology suite. I stayed there until the middle of last year when I joined Radix.

What excites you about being part of the Radix team?

Jared: Because Wood Partners was one of Radix’s first customers, I have seen Radix grow from a young company to where it is today. I’m just excited about the growth opportunity that Radix presents. 

I think we’re on a great trajectory to being one of the leading go-to sources for data in the multifamily industry, and I’m excited to be a part of that.

How do you see the multifamily industry performing and changing in the years ahead?

Jared: I’m bullish about the multifamily industry in general. The demographics are turning in our direction. Homeownership has declined over the past decade, and household formation has been on the rise as well, which adds to the number of renters that we’re seeing.

On the technology front, we are just at the beginning of really expanding the services that are available for the industry. It’s always lagged behind most other industries, as far as technology goes. But I think what several companies are doing, including Radix, is going to transform the way that multifamily looks at technology over the next decade.

What do you like to do to relax and unwind from your job?

Jared: I think I use my job to relax and unwind (laughs). I really love what I do. I also have three young children at home. They all have birthdays at the beginning of the year  – the oldest will be seven in April and the others are five and three. So I stay busy when I’m not at work.

I’m also a fitness junkie. I’ve got a full gym in my basement, and I also have a Peloton bike that I enjoy riding as much as I can. Spending time with family and friends is also one of the things that I enjoy doing.

Just for fun, tell us your favorite book, your favorite movie and your favorite musician.

Jared: I probably read 20 or 30 books a year. If I had to pick a favorite book of all time, I would say the one that’s changed my mindset the most is “Rich Dad, Poor Dad.” I studied finance in college and the way that Robert Kiyosaki looks at assets and liabilities differently from the classical definitions of assets and liabilities was a real shift in my mindset. 

As for movies, I’m a fan of the comedy genre. I also like action movies. I don’t know if I could pick a favorite one, but anything that makes me laugh or that’s exciting is a good movie for me.

I have a very diverse taste in music – anything from country to hip-hop and anything in between. But I grew up on country music, so if I had to choose a favorite musician, I’d probably pick Garth Brooks.