Labor Day marked the unofficial end of summer. And what a summer it was for all of us!
On a national basis, multifamily data and metrics have been hovering around the same points since mid-summer.
When measured year over year, traffic has not yet fully recovered since the beginning of the pandemic, when it saw a massive 75% drop.
But in the week ending on Sept. 6, we saw the biggest closing of that YoY gap since March.
Interestingly, the leases per property metric was actually ahead of where it was when compared to one year ago. Since the middle of the summer, this metric has been basically the same or slightly ahead of where it was at the same point in 2019.
As we examine the remainder of the summer months, national occupancy and leased percentage rates were down anywhere between 0.1% and 1% YoY. However, broadly speaking, this was a better performance than was expected considering the impact the pandemic has had on every sector of the U.S. and global economies.
Conversely, national net effective rent has been consistently down about 8% YoY, although certain individual markets have experienced steeper drops – particularly the coastal MSAs.
With the broader context in mind, here are some of the specific takeaways from the week that ended on Sept. 6:
Nationally, traffic was down 0.4% WoW and 8.3% YoY. Leases were down 4.8% from the preceding week but up by 6.7% when compared to the same time last year.
The national occupancy rate stood at 94.11%. That’s a decrease of 10 basis points from the week before and a drop of 50 basis points YoY.
The national leased percentage was 95.23%, down 0.1% WoW and down 0.2% YoY.
At $1,649, the national NER declined by 0.3% from the week before. The YoY decrease was 8.4%.
After the week ending on July 12 brought with it a bevy of bad stats, the following week showed a nice upturn.
In general, the apartment market has shown fairly steady improvement since its low points early on in the pandemic. Last week, I cautioned that one bad week can be just that: one bad week. I urged readers not to worry too much until we saw leading indicators like traffic and leases continue to decline over several weeks in a row.
Fortunately, during the week ending on July 19, we saw moderately positive uptick across most data points and most markets, according to Radix.
Nationally, leases and traffic increased on a week-over-week basis, with the former also increasing when compared to the same time last year. The national occupancy and leased-percentage rates were up slightly from the preceding week, and the metrics also closed their year-over-year gaps that were so large in the initial stages of the pandemic. Impressively, even the average net effective rent in the U.S. rose 10 basis points from the week before.
To be sure, these were, overall, not outsized gains. But when we consider the July 12 data, it certainly is a positive to see the declines of that week come to a stop. We will continue to monitor the data to see if the gains morph into a longer-term positive trend over the next several weeks.
Below are some of the specific takeaways from the week ending on July 19:
Nationally, traffic and leases were up 13.1% and 17.7%, respectively, when compared to the preceding week. The vast majority of the 22 individual metropolitan statistical areas tracked by Radix recorded positive WoW trends in these two metrics. On a national basis, leases also increased by 5.5% when compared to the same time last year. Traffic was still down 18.4% vs. last year, but the YoY gap was smaller than it was during the week of July 12.
The national occupancy (93.62%) and leased percentage (95.18%) rates rose by 10 and 20 basis points respectively, when compared with the preceding week. Only a few individual markets trended downwards WoW in these two areas. On a national level, both statistics continue to trail where they were one year ago – occupancy by 0.9% and leased percentage by 0.6% – but, once again, the YoY gaps compressed when compared to what they were during the preceding week.
At $1,660, the national net effective rent increased by 10 basis points WoW; during the week of July 12, it was essentially flat when compared to the week before. Net effective rents increased WoW in 12 of the MSAs tracked by Radix. However, the national net effective rent was still down by 7.5% YoY.
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.
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.