MPF Research Division Reports Q1 Revenue for the U.S. Apartment Market
Apr 06, 2012 (Close-Up Media via COMTEX) --
The U.S. apartment sector posted revenue growth of 1.1 percent during 2012's first quarter, according to MPF Research, a market intelligence division of RealPage, Inc.
In a release on April 3, MPF Research reported that national occupancy climbed 0.2 percentage points during the three-month period, and effective rents for new leases jumped 0.9 percent. Annual revenue growth came in at 5.8 percent, with occupancy up 1.2 percentage points since early 2011 and effective rents up 4.6 percent. A discussion of the nation's latest apartment performance results is available at realpage.com/MPFQ1-2012-Report.
"An improving economy and still-limited loss of renters to home purchase are helping spur apartment demand," said Greg Willett, MPF Research VP. "At the same time, deliveries remain very limited by historical standards."
Apartment demand registered at 39,900 units across the country's 100 largest metros during the first quarter, according to the MPF Research data. That demand figure was nearly three times the apartment completion volume of 13,600 units.
Occupancy rose to 94.9 percent for the first quarter. The jump in occupancy reached just over 3 percentage points since the performance bottomed in late 2009. New-lease pricing now is up 8 percent from its late 2009 low for the last cycle.
The pace of rent growth is hitting a plateau now. "Rents have been climbing for quite a while," Willett said. "Thus, while ongoing increases do exceed the historical norm, we're just repeating what happened a year ago in most markets." MPF Research's expectation is that rent growth in calendar 2012 will register at 4.5 percent, basically in line with the 2011 result and the annual rate of change seen currently.
The San Francisco Bay Area metros and Boston remain the nation's leaders for rent growth. Annual increases for new-lease pricing are at double-digit levels of 12.6 percent in San Jose and 11.5 percent in San Francisco. Rent growth is at 8.1 percent in Boston and 7.7 percent in Oakland.
Rents for new leases rose 6.4 to 6.5 percent during the year-ending in first quarter across Austin, Denver, Pittsburgh, Charlotte and Chicago. Nashville completes the top 10 list for the largest rent increases among the nation's biggest metros, with prices up 5.5 percent from first quarter 2011 to first quarter 2012.
With apartment demand running so far ahead of new supply, developers are scrambling to get more product coming out of the ground. The number of apartments physically under construction at the end of the first quarter climbed to roughly 130,000 units across the nation's 100 largest metros.
"Development activity is accelerating and will climb quite a bit further," Willett said. "Still, it's important to realize that we don't seem to be in any real danger of overbuilding in the short term. The key comparison point to keep in mind is about 300,000 units. That was the annual starts volume for more than a decade prior to the recession seen in 2008-2009, and we thought of that as a fairly restrained pace at the time. We're only now approaching the halfway point for normal building levels, and even at the end of the year we should just be two-thirds to three-fourths of the way there."
"While the biggest increases in construction are seen in the Texas markets, those areas also are the country's job growth leaders. Thus, the stocks on the way in the Lone Star State do look absorbable fairly easily. The places to watch are locales where construction is approaching its long-term norm at the same time that job growth is somewhat sluggish. Examples are seen in some neighborhoods in the Washington, DC area as well as Orange County and Seattle."
RealPage provides on demand (also referred to as "Software-as-a-Service" or "SaaS") products and services to apartment communities and single family rentals across the United States.
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