Portland has Highest Rent Growth — Barely
This article was written by Chris Clarke
National apartment market performance continued to moderate in February, as annual effective rent growth was 4.1%, some 101 basis points (bps) lower than February 2015’s 5.1%.
Despite the moderation, February marked the 19th straight month in which effective rent growth was 4.0% or higher. The last time it dipped below the 4 percent mark was in July 2014. Last month’s rate was also the second highest February effective rent growth has been since 2011, when it was 4.7%.
The latest rent-growth figure represented a 23-bps decrease from January’s 4.3%.
Effective rent growth may have been down, but occupancy rose to 94.7% in February from 94.6% the month before. True to its seasonal pattern, occupancy had been steadily declining since August 2015, when it stood at 95.4%. The February increase marked the first month-to-month increase since then.
February’s occupancy rate was essentially the same (3 bps lower) as that of one year earlier.
National year-to-date effective rent growth hit a slow patch in February. Whereas January (0.2%) stayed in the general ballpark of its five-year average of 0.2%, February (0.7%) was below its five-year average of 0.9%. You can tell on the graph below as the red marks sit just below the usual for February.
As stated in previous editions of this newsletter, February is not the most accurate measure for full-year effective rent growth; the story of the 2016 apartment market is yet to be told.
Portland Maintains Top Spot, Oakland Falls to No. 6
What a turn of events for these two MSAs. Over the course of a year, Portland and Oakland have flipped places among the top metros for annual effective rent growth among Axiometrics’ top 50 apartment markets, based on number of units.
At this time in 2015, Oakland apartments were No. 1 while Portland apartments were sitting at No. 6. In February, Portland was No. 1 for a seventh straight month with annual effective rent growth of 10.7%, while Oakland (6.7%) fell from No. 3 to No. 6.
Coming into a very close second, just 5 bps away from the top spot, was Sacramento with a rate of 10.6%.
Oakland’s February rate compared to a nation-leading 15.6% in February 2015, the largest drop in any of the top 17 markets. California still needs not to worry, as 5 of the top 17 markets listed hail from there.
Salt Lake City surprised as it rose nine spots to No. 3 with an annual effective rent growth of 7.2%, up from 3.2% the previous February and 6.5% in January 2016.
Other Notes:
- Charlotte entered the top 17, kicking out Nassau County.
- Smaller markets such as Naples, FL and Salinas, CA continued to show strong occupancy growth and annual effective rent growth.
This article was originally posted by AXIOMetrics Inc. and can be found HERE.
