Radix Co-Founder and CEO Blerim Zeqiri sat down with Michael Bull, CCIM and host of America’s Commercial Real Estate Show to discuss real-time data for traffic, leasing, occupancy and net effective rents.
Listen on to hear Blerim share why tracking leading indicators in real-time is so important as the multifamily market is changing so quickly due to the pandemic.
With the Fourth of July on the horizon, we continue to see positive developments when it comes to leading indicators in the apartment industry, according to new data from Radix.
On a national basis, both traffic and leases were slightly down on a week-over-week basis during the seven days ending on June 24. However, traffic is now only 15.6% behind when compared to the same time last year, and leases are up 3.9% from one year ago.
Also encouraging: both occupancy and leased percentage have increased for three weeks in a row. YoY, both metrics were still down 1.59% and 1.10%, respectively. But if the leading indicators such as traffic and leases continue to move in a generally positive direction, the YoY gaps in occupancy and leased percentage should close.
As for the national net effective rent (NER), that metric declined again WoW, and in fact the decline accelerated when compared to the preceding week (-0.4% for the seven days ending on June 24 vs. -0.2% for the seven days ending on June 17). However, YoY, the gap has shrunk slightly. The strongest headwinds to NER growth remain a resurgence of coronavirus cases (which are increasing in most MSAs) and continued economic fallout and uncertainty due to an increase in new cases.
With that background, here are more notable takeaways from the week ending on June 24:
As mentioned above, nationally both traffic and leases were slightly down WoW (0.7% and 1.1%, respectively). However, as also noted, the YoY trends are strong. Operators have clearly figured out ways to drive traffic and lease to make up for the ground they lost during the peak of the pandemic.
The national occupancy rate was 92.94%, and the leased percentage rate was 94.94%. That’s a WoW increase of 10 basis points and 19 basis points, respectively.
Fourteen of the 21 MSAs tracked by Radix saw their occupancy rates increased from the preceding week. The largest WoW increases were found in San Antonio (0.63%), Orlando (0.62%) and Denver (0.42%). The largest WoW decreases recorded in Miami (-0.84%), San Jose, Calif., (-0.45%) and Portland, Ore. (-0.31%).
At $1,727, the national NER stood 0.4% lower than the week before and 4.3% lower than the same time last year. On a WoW basis, NER declined in 13 of the MSAs tracked by Radix. Metros with the largest WoW decline were San Francisco (-1.4%), Riverside, Calif., (-1.1%) and Houston (-0.9%).
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It looks like these trends are positively impacting the apartment industry. During the week ending on June 10, we saw some of the most encouraging signs of improvement in leading indicators since the pandemic hit.
According to Radix, both traffic and leases were up. If this trend continues, we should start to see the year-over-year declines in occupancy and leased percentage rates begin to compress. As of June 10, the occupancy and leased percentage rates were down by 1.72% and 1.34%, respectively, from the same time last year.
In addition, even the week-over-week decline in net effective rent has started to slow. Perhaps with improvements in leading indicators and occupancy and leased percentage, we will see a gradual stabilization in rent as well.
Now that you have the broad-picture summary, let’s dig into some of the specific takeaways from the week of June 10:
Nationally, traffic was up 12% WoW. It’s still down 22.7% YoY, but that’s a smaller gap than earlier in the pandemic.
On a national basis, leases increased by 17.8% WoW. Leases also were up by 2.3% when compared to the same time last year; this is the first time in three months that leases increased YoY.
The national occupancy rate (92.72%) declined 11 basis points WoW, and the YoY gap increased to -1.72%. However, the leased percentage rate (94.61%) was up slightly for the week by 2 basis points, and the gap vs. last year is down to -1.34%.
In terms of metropolitan statistical areas, San Diego, San Jose, Seattle and San Francisco were the markets with the biggest YoY drops in occupancy rate. San Francisco, San Diego and San Jose are also in the top three in terms YoY dips in leased percentage rate. Meanwhile Phoenix, Dallas and Tampa are the closest to erasing their YoY gaps in leased percentage rate.
At $1,737, the national net effective rent declined WoW by 30 basis points. The figure represented a 3.9% decrease from the same time last year. Atlanta (-12.4%), Orlando (-10.2%), San Jose (-8.5%) and San Francisco (-7.0%) had the biggest YoY declines.
Traffic and Leases Continue Week-Over-Week Improvements During Pandemic
As April drew to a close, most of the country was still in lockdown mode. But we have begun to see some states start to lift the restrictions they put in place five to six weeks ago.
And although most of us contend it will be a while before things return to normal – or something resembling our former days – new data from Radix shows that the apartment industry is finding its footing as it relates to the leading indicators of traffic and leases.
During the week ending on April 29, both traffic and leases increased on a national basis when compared with the preceding seven days. This was the latest in a series of week-over-week improvements for these stats after they reached a low point four weeks ago.
This trend suggests the worst may be over when it comes to these two metrics. As states continue to open, these numbers should continue to inch up, though most likely concessions and rent discounts will remain in order to attract prospects to properties.
With that being said, let’s get to the major takeaways from the week ending on April 29:
Traffic and leases were up 9.4% and 9.5%, respectively, WoW, but they were still down 51.2% and 29.4%, respectively, YoY. For context, it is worth remembering that leases were down 50% YoY just four weeks ago.
The national same-store occupancy rate stood at 93.27%. That’s down 0.11 percent from one week earlier and a full 101 basis points from the same time last year. The metros with the largest YoY declines were Orlando (-2.66%), San Diego (-1.94%) and San Francisco (-1.86%).
The national same-store leased rate was 94.69%, up 0.01% from the preceding week but down 1.03% YoY. The metros with the biggest YoY declines were Washington D.C. (-2.01%), Las Vegas (-1.69%) and San Antonio (-1.68%).
At $1,815, the average net effective rent in the U.S. was down 0.5% from one week earlier but was still 0.3% higher than it had been at the same time last year. That we could still see a positive YoY comparison after six weeks of a pandemic is a testament to the strong rent growth we have seen in the last decade in most markets.
I hope you continue to check our website as the pandemic continues, as I will be providing weekly updates of these stats. As always, I wish you, your families, your colleagues and your residents’ health and safety.