Axiometrics Reports Stable Occupancy and Effective Rent Growth for U.S. Apartment Market During September

Despite Increasing Supply, Market Still Generating Solid Gains

DALLAS, TX--(Marketwire - October 15, 2012) -  The U.S. apartment market finished the third quarter with an annual effective rent growth rate of 3.64% in September, while the occupancy rate climbed to 94.55%, according to Axiometrics Inc., the leading provider of apartment data and apartment market research. Revenue growth, which combines the effective rent and occupancy growth into one number, measured 1.05% from the beginning to the end of the third quarter, as compared to 1.08% over the same period in 2011. 

New apartment supply coming online has yet to have a significant impact on pricing, though annual effective rent growth for the full third quarter was 3.7%, down from 4.0% in the second quarter. According to Axiometrics, during the third quarter more than 28,000 new units were introduced to the market, which was almost as many as were delivered in the first six months of the year combined (31,593).

"The question going forward is how the apartment market will perform as new supply continues to enter the market at an increasing pace," said Jay Denton, vice president of research for Axiometrics. "The delivery number will continue to escalate for the foreseeable future as it climbs back to the relatively stable level the apartment market experienced from 1999 to 2008. Because of seasonality, as well as some potential impact from new supply, we expect year-to-date (YTD) effective rent growth to decline the rest of this year and finish near 3.60% in December."

Effective Rents and Occupancy

Annual effective rent growth slowed for the fifth consecutive month, declining from 3.69% in August to 3.64% in September. The peak for annual growth in 2012 was 4.14% in April, just as the monthly job growth numbers began to slow. Still, 35 markets have an annual effective rent growth rate greater than 4.0%. In addition many portfolios, such as REIT properties, continue to eclipse the 4.0% annual growth rate as well.

YTD growth, which peaked at 4.73% in August, declined slightly to 4.70% in September. For comparison, YTD growth measured 5.17% in 2011 and 5.16% in 2010. REIT properties lowered rents 0.37% between August and September, and their YTD effective rent growth fell from 6.74% in August to 6.34% in September. According to Axiometrics, while REIT properties showed more downward volatility in September, they had also raised rents more aggressively earlier in the year during prime leasing season.

Asset classes are all performing similarly at the moment. On a national level, Class C has the highest annual effective rent growth at 3.9%, Class A is next at 3.7%, and Class B is right behind at 3.6%. Differences become more pronounced at the individual MSA level. For example, Class A properties in Seattle have increased rents 7.5% from a year ago while Class C rents are up just 4.2%. In Dallas, the roles are reversed as Class C properties have the best relative gains over the past year with growth of 5.9%, while Class A rents have grown just 4.1%.

The following table breaks down annual effective rent, occupancy, and revenue growth for several key MSAs across the country. While in some markets Class C properties lag in rent growth as compared to the other two classes, their occupancy gains place them at the top in terms of revenue growth. In addition, while Class A properties might lag in relative rent growth, they have "pushed" effective rents the most on an absolute basis in all nine MSAs included.

MSA   Class   Annual Effective
Rent Growth
Growth (bps)
  Annual Rev.
Relative   Absolute  
Atlanta, GA   A   3.9%   $44   96.0%   -1   3.9%
Atlanta, GA   B   3.3%   $25   93.8%   47   3.8%
Atlanta, GA   C   2.3%   $13   87.1%   236   5.2%
Boston, MA   A   4.7%   $127   96.9%   -72   4.0%
Boston, MA   B   4.1%   $68   96.0%   -82   3.2%
Boston, MA   C   5.9%   $71   95.8%   -99   4.8%
Charlotte, NC   A   9.1%   $91   96.6%   18   9.3%
Charlotte, NC   B   6.7%   $50   95.8%   86   7.7%
Charlotte, NC   C   6.0%   $34   92.9%   333   9.9%
Houston, TX   A   7.1%   $94   95.7%   84   8.0%
Houston, TX   B   6.3%   $50   94.6%   134   7.8%
Houston, TX   C   6.4%   $34   87.8%   189   8.7%
Las Vegas, NV   A   0.7%   $6   93.5%   6   0.7%
Las Vegas, NV   B   -1.7%   -$13   92.4%   -19   -1.9%
Las Vegas, NV   C   -1.5%   -$8   86.4%   -312   -4.9%
Los Angeles, CA   A   4.4%   $108   96.8%   33   4.8%
Los Angeles, CA   B   3.2%   $52   96.5%   62   3.9%
Los Angeles, CA   C   0.8%   $8   93.9%   -79   0.0%
Phoenix, AZ   A   2.3%   $22   94.6%   -20   2.0%
Phoenix, AZ   B   2.4%   $18   94.0%   59   3.0%
Phoenix, AZ   C   3.7%   $19   90.6%   151   5.5%
San Francisco, CA   A   9.2%   $276   96.3%   -83   8.3%
San Francisco, CA   B   9.6%   $215   96.5%   42   10.1%
San Francisco, CA   C   16.6%   $259   95.0%   -232   13.8%
Washington, DC   A   2.1%   $49   96.1%   46   2.6%
Washington, DC   B   2.8%   $41   95.7%   -11   2.7%
Washington, DC   C   1.1%   $11   94.5%   -20   0.9%
National   A   3.7%   $52   95.6%   -12   3.6%
National   B   3.6%   $35   95.1%   24   3.9%
National   C   3.9%   $28   92.5%   80   4.8%
Data as of September 2012
Source: Axiometrics Inc.

Top and Bottom Performing Markets The national map illustrates some of the hottest areas of the country. Texas, Denver, the San Francisco Bay Area, Seattle, Boston, and Charlotte are some of the strongest markets over the past few years. Although growth has moderated in most of these MSAs from its peak in the summer of 2011, annual growth rates in all remain above 4.0%. In addition, Miami has had very solid growth since the beginning of 2010, and strong growth is now appearing in Fort Lauderdale and West Palm Beach, two weak markets last year. 

MSAs shaded in blue on the map, which have annual effective growth of less than 2.0%, typically have some of the worst job growth rates in the country. Augusta, Colorado Springs, Providence, Detroit, and Tucson have relative annual job growth in the -1.8% to 0.5% range according to the August Bureau of Labor Statistics numbers. The national average is 1.4%. As a result, each of those markets have annual effective rent growth in the -1.4% to 1.9% range, while the national average is above 3.6%. 

About Axiometrics
Axiometrics is the only multifamily research provider to survey every property in its database at the floor plan level every month. Every property. Every month. Only Axiometrics. Learn more at or by calling 214-953-2242. 

Contact Information:

Ross Coulter

Annual Effective Rent Growth Rankings for Top 88 Markets